How Social Media Can Protect You From Identity Theft and Fraud


November 21, 2016

Emma Cloninger, MRC Marketing Coordinator

As a marketer, I know the value and opportunities of a digital footprint. Maintaining an active online presence is key to staying relevant and evolutionary in today's information age. Furthermore, the demand for instant gratification is fulfilled through electronic engagement particularly within the realms of social media. Our experiences today predominantly exist online.

Although these platforms certainly make information more accessible and life in general more convenient, I as a consumer worry that my online activity makes me more susceptible and vulnerable to fraud and identity theft. Just last year 13.1 million US consumers were victims to identity theft [i] and fraud losses incurred by banks and merchants worldwide reached $16.31 billion [ii]. However, new data now shows that active participation on social media accounts can actually protect you from being a victim. Behold the catch 22.

Greater Participation Discourages Fraudsters

Socure, a company which offers digital identity verification solutions, found a strong correlation exists between fraud and social network usage. Their research showed that individuals who do not belong to any social networks assumed a fraud risk of 22.9%. That number drops by 5.7% when consumers participate in personal, blog-based and professional social media networks [iii].

To further authenticate these findings they conducted an experiment testing the effectiveness of a fraud model that relies upon social data based on a supervised learning approach to identity verification.

To provide a little context behind traditional identity verification, the standard process relies on basic credit bureau data, such as past record of credit history, bank loans, etc. This data is validated with offline data, or personal history (i.e. date of birth, home addresses and Social Security numbers). However, younger consumers or international populations with little or no credit history make it difficult to validate identity, often being denied transaction approval and simultaneously more vulnerable to fraud.

Testing 1, 2, 3

Socure's experiment demonstrated a supervised learning approach to identity verification. In particular, three sets of data were assembled to test the power of online and social media data to validate authenticity:

Real Data -- The control group consisted of 10,000 real US consumers identified by name address, phone number and date of birth.

Synthetic Data -- 10,000 fake identities were generated automatically using an online tool, simulating fake data that fraudsters tend to make up. It had the following attributes:
  • Random first and last name
  • Random date of birth
  • Email -- random name connected to an existing domain
  • Phone number -- valid area code preceding random 7 digits
  • Address -- city, state, country and zip were valid and matched (house number and street name were random)
  • Random IP address
Stolen (Simulated) Data -- All the data in this set was real and valid, but belonged to different persons. This data simulated most attributes of an identity, but the fraudster changed some components for the misdirection of goods, funds or services to themselves instead of to the valid identity [iv].

Using each of the three data sets, Socure built a predictive model that generated a series of social and online data for each set of identifying information, to see if those variables could correctly classify each "person" into their true category: real, fake or stolen. According to Socure's research, the predictive model showed a success rate of 98.8% accuracy [v].

Capitalizing on New Opportunities

Now with social media on the rise, merchants and financial institutions have a unique opportunity to approve online transactions, purchases and money transfers with data derived from social media account information, that until recently was difficult to achieve.

Ever tried purchasing an item online and were denied? You hastily check your bank account to see that you have sufficient funds all the while wondering why your card wasn't processed. It likely could have been because there wasn't enough available credit bureau data to validate your identity. Now there's an alternative solution.

The beauty behind utility of social media data as ID verification is that the information is authentic. It is very difficult to forge a LinkedIn account dating back 8 years with hundreds of connections and a multitude of endorsements and employment experience. Similarly, maintaining active social media profiles will make you less appealing to fraudsters as your information is genuine and harder to spoof.

Recognized Value, Slow Progression

Although the value of this process is understood by businesses in the industry, its capability is still being developed. A study by Worldpay reports that 60% of respondents already use social media in their review process, but 52% want to make better use of it, lacking the knowledge to do so. This might be a result of usage being manual and extremely time consuming, as most companies do not have an automated process in place for using social media authentication [vi].

Where We Go from Here

As we look to the future, there's no doubt that online capabilities and technological advancements are growing exponentially. The MRC offers a safe, knowledgeable community to help make sense of the changing eCommerce landscape, including effects of the rapid rise in use of social media. At the MRC, fraud and payments professionals from both merchant and solution provider businesses are encouraged to challenge one another, share information conducive to growth and innovation and keep pace with technological developments.

The MRC is proudly a community supporting one other. Join as an MRC member or attend one of the MRC annual events in Las Vegas, 13-16 March 2017, and London, 24-26 April 2017. This year MRC Vegas 2017 expects over 1,500 attendees from 30 different countries representing over 450 global companies. Attendees will have access to over 70 sessions of educational content categorized by experience level and over 60 exhibitors.

[i] Identity Theft and Cybercrime, Insurance Information Institute

[ii] Global Card Fraud Losses Reach 16.31 Billion, Business Wire

[iii] Using Online, Social Data to Make Thin Files Thick,

[iv] Real, Fake or Stolen: Validating the Use of Alternative Data for Identity Verification, Socure

[v] Using Online, Social Data to Make Thin Files Thick,

[vi] Fraud Trends 2016: Latest Perspective on International eCommerce Fraud, Worldpay