Scams in the Banking Sector and the Role of Electronic Identity Verification e-IDV

The financial sector is the backbone of the economy; any scam in this industry leads to a loss in the economy. Legal authorities are making efforts to safeguard the interests of banks, investment companies, and insurance agencies. Criminals are very advanced these days.

They come with new techniques and tricks to decode the algorithms of the client account. They commit mostly scams with fake identities and pretend to be the customer. From 2013 to 2021, 2021 had the highest number of cyber scams; in 2022, almost 1829 individuals faced cyber crimes. e-IDVs are used to verify the identity of the customers and mitigate the risk of cyber fraud.

What is e-ID?

e-ID verifies the individual’s identity using facial, sound, eye, and fingerprint biometrics. This process is done digitally; the customer’s name, address, and bank statement are verified and matched against the data previously stored in the database. Both public and private sector databases are used to check the authenticity of the individuals and the submitted documents. Electronic verification systems can be used to fight against terrorism, money laundering, and fraud. Through these solutions, businesses can completely know their customers, and when client due diligence is entirely known, the chances of scams are minimized.

Importance of Electronic Identification?

Electronic identity verification is essential for business activities; the client’s identity becomes clear to the company. Online identity verification services use encrypted data to safeguard the client’s credentials. This satisfies the customers, as it protects them from fraudulent activities. It saves the company from miscellaneous expenses; incorrect deliveries can be controlled with updated information. Customer experience is enhanced as they do not have to visit and follow the office protocols of 9 to 5 timings. Electronic verification can be done anywhere worldwide; just a strong internet connection is required. Scanners detect the liveness of the client to avoid fake identities. Verified customers are allowed to bypass the accounts, and the remaining clients’ authentication does not proceed because of the red flags.

Types of Banking Fraud

Following are the scams involved in the banking sector:

  • Overpayment Scam

An overpayment scam is also called a refund scam; in this fraud, the scammer buys anything online and then pays an excess amount. This act is done to scam the retailer; hackers then ask the retailer to refund their extra amount. When the excessive amount is repaid, it is observed that the cheque given by the client or hacker was fake. Sometimes, merchants even deliver their products, so they lose their money and goods.

  • Online Refund Scams

Hackers find victims in these scams by cold calling them; they pretend to own a company. The victim is informed that someone ordered an expensive amount using their account number. Then they offer the victim that the company will refund the client, for this sufferer has to follow the operator’s guidelines. The victim is asked to log in to their bank account and complete the form. The scammer gets access to their account and steals all the data from their account.

In some cases, they make overpayments to the client, and by using the customer’s good faith, they ask them to send excessive amounts. After the transaction, clients discovered that the scammer had never transferred any amount.

  • Employment Scams

Employer methods are the prevalent scams used to steal the bank account details of the job seeker. They promise the individuals that they will provide them employment, so they have to give a minimal advance payment. Sometimes, they ask for bank details to provide the commission to the user; they do such acts to hack their account and use it for illicit purposes.

  • Charity Scams

Scammers pretend they are from charity organizations and ask for client donations. They mostly use a fictitious name, similar to any reputable organization, so that users misinterpret. They demand charity and use the account for their purposes. Such scams can be identified by investigating for what purpose their money will be used.


Electronic ID verification safeguards companies and clients from various scams in every industry, especially in the banking sector, health, or travel agencies. These verifiers keep the client’s information secure, and customers must pass through multi-steps to get verified. Businesses can get thorough details of their partner while collaborating, preventing them from future loss. AML (Anti Money Laundering)  electronic identity verification complies companies with the latest regulations and prevents them from thrifty penalties. Customer trust is built as their onboarding is streamlined and smooth. Satisfied clients recommend the business to their family and friends. e-IDV gives a cost-cutting advantage by preventing companies from unnecessary, miscellaneous expenses. This solution is advantageous for both the companies and clients.

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