Anna Sorokin, the so-called “fake German heiress” (perhaps better known by her alias Anna Delvey), came dangerously close to duping a hedge fund out of $25 million. According to The New York Times, she intended to defraud the financial institution by creating fake bank statements in Adobe Photoshop, a task that she said took “surprisingly little time.”
By: Ronan Burke, CEO of Inscribe
Anna Sorokin, the so-called “fake German heiress” (perhaps better known by her alias Anna Delvey), came dangerously close to duping a hedge fund out of $25 million.
According to The New York Times, she intended to defraud the financial institution by creating fake bank statements in Adobe Photoshop, a task that she said took “surprisingly little time.”
She’s not alone: image-editing tools like Photoshop are popular among fraudsters because they make it easy to alter information on financial or identity documents like bank statements, utility bills, W-2s and more. Combine that with the fact that fake ID marketplaces and bank statement generators are only a Google (or TikTok) search away, and it’s not hard to see why cases of document fraud rose by 79% in 2022.
Mitigating this risk has become more urgent than ever for financial institutions. In recent research that Plaid conducted with more than 400 lending leaders, 61% say they have experienced document fraud—making it the most significant type of fraud they’ve experienced.
But document fraud can be difficult to detect. Alterations are often nuanced (such as changing the name of a transaction on the fifth page of a 90-day bank statement) and many fraud signals are invisible to the human eye (like details about when the document was last edited, which are hidden in the metadata).
Thankfully, data from processing millions of documents can shine a light on the most popular document fraud tactics being used by fraudsters today. Keep reading for three trends from the “2023 Document Fraud Trends Report” to watch out for this year.
One of the most surprising trends uncovered from reviewing documents in 2022 is that, in many cases, fraudsters actually are who they say they are.
Third-party and synthetic ID fraud have understandably gained a lot of attention over the past few years; synthetic identity fraud, alone, resulted in $20 billion in losses for U.S. financial institutions in 2020. And according to the 2023 Identity Fraud Report, a little more than half (51%) of all fraud incidents in financial services were categorized as identity fraud (meaning false identity details were used by fraudsters).
But what about the other half?
While many fraudsters are using fake or stolen identities to carry out their schemes, about half (45%) of the fraudulent documents detected did not include alterations to identity details.
Instead, these individuals were using their real identity to engage with a bank, but falsifying information like income, cashflow, bank balance and other financial details to increase their chances of approval or attain larger lines of credit.
In order for organizations to defend against this first-party fraud and credit abuse, they need to have multiple checkpoints for potential customers to pass before they’re granted a loan or line of credit. So just because someone passes an identity document check, it’s critical to still check the legitimacy of any financial documentation they provide as well.
Fraudsters who need a fake financial document for a credit card or bank account application don’t have to look very hard: bank statement templates, document generators, “novelty” document providers and more are only a few clicks away.
Perhaps even more concerning, many fraudsters have adopted a community mindset, leveraging social media platforms like Reddit, Telegram and TikTok to share techniques, tips and templates for successfully committing document fraud. When a fraudster is able to fool a financial institution with a fake document, they share that document template with others.
In fact, the number of fake or fraudulent document templates being used has skyrocketed in recent years. Last year alone, the number of templates detected tripled, with more than 100 unique templates being flagged in a single week— meaning that more than 100 distinct, unique document templates were identified; the total volume of all document templates detected was often in the thousands for a single week.
If fraudsters are sharing tips and tricks, then fraud investigation teams can too. More and more organizations are creating dedicated spaces (like a Slack channel or wiki) where investigators can pinpoint noteworthy fraud incidents, discuss edge cases or get a second opinion from their other team members on whether something looks like a template they’ve seen before.
When it comes to which documents fraudsters choose to use when attempting to fly under the radar, you might guess that they’d focus on ones from smaller institutions, like regional banks and credit unions. Since investigators are likely unfamiliar with these institutions, and their financial statements, they would also be less likely to spot a fake.
In reality, that’s not the case. Data shows that the highest fraud rates include documents that claim to be from major financial institutions, like Bank of America, Wells Fargo and TD Bank. And ubiquitous documents like W-2s and CP-575s are also among the most commonly falsified.
Another interesting data point uncovered is that the most common days of the week for fraudulent documents to be submitted were Sunday and Saturday, respectively.
What does this mean for your document review process?
When you come across certain tax documents, bank statements or applications submitted on Sundays, don’t just assume that they’re legitimate because they seem innocuous and familiar. That’s what fraudsters hope you’ll do. Instead, if something feels off or looks suspicious, be sure to flag these documents and give them a closer look.
Eventually, Ms. Sorokin was caught and sentenced to 12 years in federal prison for her crimes, but not before conning banks, hotels and a private jet company out of an estimated $200,000. Her case illustrates how even when fraudsters are caught, it’s often only after they’ve been able to do substantial damage.
Hopefully, sharing these fraud trends helps strategically inform fraud prevention strategies for 2023. When financial institutions arm themselves with knowledge, they can outsmart fraudsters.
