Fraudsters are becoming increasingly sophisticated in their methods, making it ever more essential for firearms businesses to be vigilant in their Know-Your-Customer (KYC) policies. Just earlier this year, 3 men were caught after using a stolen military ID to buy multiple guns. They purchased these guns over the course of June-July of 2023 from a reputable seller in Wyndmoor, PA. These men used the “Buy Online, Pick Up in Store” option to acquire a total of 14 guns. How were they eventually caught? The criminals went back to the store a month later to acquire an additional 14 more guns. However, this time their background checks from the first purchase round had already been flagged by law enforcement.
The store alerted the local authorities after denying the pickup and sending the criminals on their way. A Lyft hosting the three men leaving the gun shop was promptly pulled over by the police and they were arrested. Had the fraudsters not purchased additional guns, it likely would have been much more difficult for them to be located by officials. Even still, most of the original 14 guns purchased have yet to be successfully tracked down.
Stolen IDs have long been a cause for concern. The thought of someone assuming our identity and wreaking havoc on our lives is undoubtedly unsettling. However, there is a more insidious and rapidly growing threat that demands our attention: Synthetic Identity Fraud. This clandestine form of fraud has emerged as the biggest menace in the world of financial crimes, impacting not only individuals but also businesses across various sectors.
Synthetic Identity Fraud takes identity theft to a whole new level. Unlike traditional identity theft, where criminals use a real person's personal identifying information (PII) to conduct fraudulent activities, synthetic identity fraud involves the creation of entirely fictitious identities. Fraudsters skillfully combine genuine but illegally obtained elements, such as Social Security Numbers, with fabricated or mismatched PII, including names and addresses, to establish fraudulent accounts and carry out illicit transactions.
These criminals then use these altered IDs with real information to pass background checks and gain access to firearms illegally. In some states, such as Tennessee, purchasers aren’t even required to provide their social security numbers when filling out the ATF Form 4473, making it easier for fraudsters to sneak through. To combat this, the U.S. Government Accountability Office (GAO) has been participating in undercover investigations using their own versions of these fraudulent IDs to uncover trends of where and how synthetic identities are passing background checks.
Recently, a concerning incident occurred in Mesa, California where a man successfully used synthetic IDs to purchase multiple firearms at a gun show. He had previously managed to evade detection, but his luck ran out when he mistakenly used the wrong fake ID during his second attempt at buying from the same vendor. Luckily, the vendor recognized the man and was able to report him to authorities. However, this case highlights the alarming fact that even in states with stringent gun regulations, individuals can still exploit loopholes and engage in illegal activities making it more important than ever for any arms dealers to make sure they are KYC compliant.
Falling short of KYC can have severe consequences for firearms businesses. Multiple fraud claims can lead to increased insurance premiums or even being classified as "uninsurable" by their vendor. This not only affects financial stability but also makes it challenging to find new insurance providers. Moreover, if the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) discovers a trend of fraudulent activities slipping through at a gun shop, they may shut it down due to their strict regulations.
One of the best ways to combat Synthetic Identity Fraud and ensure businesses are truly KYC compliant is through the authentication of physical identification documents. By thoroughly verifying the authenticity of government-issued IDs such as driver's licenses, passports, or state ID cards, firearms businesses can establish a solid foundation of trust with their customers. Physical ID authentication not only ensures that the person presenting the ID is who they claim to be but also helps detect forged or counterfeit documents. With advanced technology solutions like PALIDIN, gun shops can authenticate customers' identity documents in person or remotely, providing a secure and efficient means of establishing trust, mitigating fraud risks, and maintaining compliance with ATF regulations. By embracing identity authentication practices, businesses can stay one step ahead of fraudsters and foster a secure environment for both them and their customers.
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