1600 fake bank accounts discovered
Smartphone-based bank N26 is tied to yet another scandal of fake accounts used on online marketplaces and for money laundering. Find out how you can protect your brand from this threat.
Payments at your fingertips. It’s so easy to pay for your overhead bills, the coffee maker you just ordered on Amazon, or your new suppliers with a few taps on your smartphone. But are you really sure who you’re paying?
Founded in 2013, N26 is an online bank based in Berlin, Germany. It has most of the features of a traditional bank: customers can use current accounts, credit cards (even physical ones), send and receive payments, etc, but they do this all online, from their smartphone banking app.
N26 has a European Banking License and the EU directives protecting deposits up to €100,000 apply to N26’s customers as well. In addition, the smartphone-based bank offers top-notch security for its users, including 3D secure technology. N26 is available in various regions of the world, including the EU, Switzerland, the UK, the US and Brazil.
The bank also advertises itself with its ease of use and fast processes. In fact, customers should be able to create a free bank account within 8 minutes. No wonder fraudsters discovered N26 for themselves as well.
N26 is not new to the world of fraudster account scandals. Back in 2019, news reports have already broken out about several hundred fake accounts being used for money laundering and e-Commerce fraud.
Now, history seems to repeat itself, except with larger numbers. As the German Handelsblatt reported, no less than 1600 fake accounts have been set up in the period between May 2019 and July 2021. The majority of these accounts seem to have been used by fake shops and fraudulent sellers on eBay.
The list was created based on information gained from publicly available customer messages on various internet fora, e.g. auktionshilfe.info and data leaks.
Although N26 refused to share information about its account holders, a spokesperson certified that the list contained N26 accounts suspected of fraud and in most of these cases, already shut down. However, they omitted to mention the exact number of N26 accounts in question.
N26 experienced a boost in clients over the past few years, at least partially due to the coronavirus pandemic and its effects on e-Commerce as well as physical banking. The number of 3.5 million customers reported in 2019 has doubled to 7 million by early 2021. A significant part of this growth, 2 million customers have signed up within a period of 12 months.
Apparently, quite a lot of those new customers happened to be fraudsters with dishonest intentions. These intentions tend to be defrauding brands and customers by selling IP-infringing products, or to use the e-Commerce business as a front for other illegal activities like money laundering. Or, maybe even both.
Payments are an essential step in this process, but setting up a means of untraceable payments is getting more difficult as we speak. As various KYC regulations are imposed upon the sector, fraudsters have to come up with new ways to arrange their payments.
In its investigative article, the Handelsblatt conducted a survey of various German authorities regarding the amount of fraudulent accounts at different financial institutions. The findings reveal that out of 362 money laundering notices in the federated state of Brandenburg, 42 perpetrators were clients of N26. Similarly, in another state, Lower Saxony, every tenth money laundering case was tied to an N26 account.
This means that N26 is among the banks with the highest fraudulent account rate. Why could that be? This question is hard to answer, but the ease with which a client can register must definitely be among the main reasons. Also, it’s highly likely that the way N26 screens and IDs its customers may be insufficient.
BaFin, the German Federal Financial Supervisory Authority has raised the issue with N26 and asked the bank to implement stricter measures against money laundering on the platform. To help move the issue along, BaFin sent a special officer to N26 with the task to monitor progress in this area.
We at globaleyez sincerely hope that N26 will step up its game and introduce effective barriers that will prevent fraudsters from setting up accounts. But we know from experience that this can take a while. If your brand can’t wait that long, globaleyez has the perfect solution to the problem.
Payments are an effective means of investigation for online brand protection experts. Following the money has helped us countless times when uncovering fraudsters and their IP-infringing listings.
While tracing a payment may be difficult for a brand, it’s one of the most essential parts of our jobs as brand protection experts. We have excellent cooperation with several payment providers and we can even ensure the takedown of fraudulent means of payment as well. Our comprehensive services are highly scalable and are adapted to each of our clients’ exact needs.
Don’t wait for N26 to pull itself together. Let globaleyez detect and eliminate IP-infringing online listings and fraudulent payments for your brand. Contact us and let us know the specific issues your brand is facing.