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Disposable Numbers
Discover how to detect disposable numbers and fight fraud using phone number lookup technique.
Discover how to detect disposable numbers and fight fraud using phone number lookup technique.
According to a TransUnion report, digital fraud has rapidly increased over the past five years.
In financial services, the number of these types of offenses has increased by 39% since 2019. And more than half of respondents say they have been subjected to fraud attempts via phone or text message.
Fraudsters often use disposable phone numbers to commit misconduct using this communication channel.
Disposable numbers, also called disposable phone numbers, are public numbers that a person can use for a limited period of time.
These phone numbers can be useful to many categories of people, including:
Although the disposable phone number (DPN) ecosystem was originally designed for privacy and user convenience, it has recently been increasingly exploited by fraudsters.
A recent study confirms the misuse of such numbers for criminal purposes. They are used to creating fake accounts and illegally accessing various accounts.
Typically, disposable phone numbers are used to bypass security measures installed on online platforms, including two-factor authentication.
The study analyzed SMS messages sent to DPNs. As a result, the scientists found that the number of disposable numbers used to create fake accounts is in the millions. Moreover, many of them were used to access financial organizations' services.
Modern alternative data providers apply innovative technologies in their work, which make it possible to determine whether a potential borrower uses disposable phone numbers.
If such a fact is established, applicants will automatically be assigned a higher risk level. After all, in such a situation it can be assumed that they want to hide their real phone numbers, probably for fraudulent purposes.
The technology by which a lender can identify the use of disposable numbers and obtain other important information about a borrower with only their phone number is called phone number lookup.
The phone number lookup in question has shown excellent results in credit risk management. This is because mobile phones have become an integral part of modern life.
According to WEF, there are around 8.6 billion mobile subscriptions worldwide, which is even more than the entire world population.
This means that almost all loan applicants use multiple phone numbers.
Thus, lenders can obtain information about almost every person with just checking their phone number.
Recently, VoIP (voice over IP) providers have been competing with traditional mobile operators. According to Research and Markets, the VoIP market will reach $102.5bn by 2026.
VoIP allows the transmission of media data via the Internet Protocol IP. This is the technology used by services that provide subscribers with disposable numbers.
Based on these statistics, we can assume that the popularity of using such numbers – including by fraudsters – will continue to grow.
Lookup phone numbers, and in particular the identification of disposable phone numbers, can bring certain benefits to credit organizations:
1. Optimization of credit risk management. The use of a temporary number can be a red flag for a lender when reviewing a loan application. This screening can identify a potential fraudster and reduce default rates by reducing fraudulently originated loans.
2. Budget savings. Lenders can reduce KYC costs because this technology can identify up to 30 percent of fraudsters at the loan application stage.
3. Expanding the target audience. A phone number is an informative source of alternative data that is used to generate a digital credit score for a potential borrower. This allows lending to unbanked categories of the population.
Disposable phone numbers can be used for fraudulent loan processing. Their detection as part of phone number lookup helps to identify unreliable borrowers at an early stage and improve credit risk management.
How to Advance Credit Scoring With Phone Number Lookup