Document fraud is a problem that poses consequences for many organizations, particularly in the financial and insurance sectors. We refer to document fraud as the use of false or altered documents in order to gain access to goods, services, or information.
What type of services are affected?
Document fraud affects many aspects of financial services, insurance claims, and government services for starters, but the list goes on and on.
A good example of document fraud can be found in mortgage applications, during which a person uses fake or altered tax documents, pay stubs or bank statements to obtain a loan they might not be qualified for. How much of a problem is this? Well, in 2021 CoreLogic reported a 37% year-over-year increase in mortgage fraud. This means 1 out of 120 mortgage applications were found to contain fraud – “found” being the operative term, because sometimes fraud goes unnoticed.
To compound matters, IDP (Intelligent Document Processing) is a technology that uses artificial intelligence (AI) and machine learning (ML) to automate the processing of various types of documents such as invoices, contracts, receipts, and more.
IDP: Why is this new technology relevant?
More and more financial services companies are using IDP to automate the processing of documents for applications, such as mortgages, and while automation saves money, it often leaves out human review. Without proper countermeasures, this automation may enable document fraud to grow and may even imply that the problem is bigger than the numbers indicate if there are no checks in place. And who pays for the cost of document fraud? Well, it’s organizations and consumers, of course.
For this reason, it behooves companies that utilize IDP to automate the intake of documents to take steps to verify the authenticity of documents. This can be done by using technology such as AI, computer vision and even blockchain. These technologies can identify anomalies found in documents and create alerts for suspicious records containing documents requiring human review while allowing documents that don’t present signs of fraud to be processed via automated means.
A win for automation and a win for fraud protection.
In conclusion
Document fraud is a serious problem that can have far-reaching consequences across a number of industries. By being vigilant and taking steps to verify the authenticity of documents, organizations can help to prevent fraud while offering more convenience and enjoying the cost-savings of digital transformation.
