Whether a fraudster designs a completely fictitious synthetic identity or impersonates the identity of a real person, the impact of these actions can have huge consequences and can resonate around the various parties directly or indirectly involved.
Checking and proving an individual's identity is a challenge for both the public and private sector, especially as consumer fears continue to grow around identity theft and data security. Identity authentication is becoming increasingly important to us in order to improve business processes, as well as combat fraud, money laundering and other financial crime.
In response to the problems of identity fraud and the associated money laundering and terrorist financing that is often linked to it, regulators around the world have taken steps to tighten up their local Anti Money Laundering (AML) regimes. The more enlightened regulators have taken a risk-based approach to enforcing their AML controls, allowing organisations to adopt controls that are proportionate to the risk involved. These regulators readily recognise the value of electronic data, as well as the benefits of integrating new technology to existing processes.
Experian has embarked on a programme to deliver identity authentication services, utilising electronic data around the world, to those countries that have the demand and the data to support such services.
These services are designed to help organisations be compliant with the regulators and also to address the issue of identity risk.
They allow organisations to reduce costs and fraud losses, complete the fulfilment process faster, reduce ‘drop offs’ - when individuals drop out of the process when asked to present documents - and generally improve the customer experience.
This White Paper examines the problem of application fraud for financial services organisations and explores how implementing an effective fraud prevention system and processes can have a significant impact on the organisation’s bottom line.
With application fraud costing financial services organisations somewhere in the region of US$ 2 trillion a year and rising, it is a problem that cannot be ignored. Fuelled by the growth of the internet, fraud has over the last ten years transitioned from cottage industry to a mass-market crime opportunity operating on a global scale.
With fraud rates continuing to rise and with the authorities struggling to control the complex, international problem it is up to the financial services sector and the wider credit industry to make it uneconomic for the criminals by preventing frauds at the point of application.
Fraud is a non-competitive issue and all industry sectors need to work together to combat it. The effective use of data, shared at both organisational and industry level, combined with algorithms and effective screening mechanisms can ensure that organisations can combat fraud before it affects profits, reputations and society as a whole.
Increased data sharing is a must, to allow those organisations being targeted to have the widest possible set of data to compare applications and find the patterns and links that deter fraudulent applications and stop fraud losses before they start. Depending on the current fraud protection measures, ROI can be achieved in a matter of weeks and certainly months.
This whitepaper explores the vulnerabilities of the South African financial services sector and provides an overview of best practice mitigation strategies for reducing the risk of fraudulent activities during and after the World Cup tournament. From simple processes to complex fraud detection systems, there is a wide range of solutions which can be adopted to reduce the exposure to fraud during the tournament and for years to come.
During June and July 2010, South Africa played host to the FIFA World Cup tournament. This prestigious event consists of 64 matches played in ten stadiums spread over nine South African cities. It was expected that approximately 450,000 visitors from all over the globe visited South Africa during the event.
As hosts to the FIFA World Cup, South Africa benefited from many of the associated socio-economic advantages that often accompany such an event. Improved public transportation, local facilities, increased employment and many other positive factors are all associated with global sporting events like the FIFA World Cup.
Unfortunately, in addition to these opportunities, such events can also attract criminals with increased opportunities to commit fraud. Large volumes of foreign visitors and increased spending during such an event all provide cover for fraudulent activities. Financial institutions are likely to feel the impact of such fraud more than any other collective business as they are at risk from a number of different criminal operations. In order to be protected against such fraud, financial services organisations will have to be prepared and processes in place which will protect the institution without impacting the legitimate consumer.
An event such as the FIFA World Cup is an ideal opportunity for fraud and risk managers to strengthen their mitigation strategies which can be continually utilised after the event to provide a more solid platform for business in the future. Fraud and risk managers should look to the tournament as a means to gain exposure within their businesses to leverage this exposure to encourage investment in fraud prevention processes and systems.
The white paper concentrates on the methodologies associated with bust-out, how it is perpetrated and how to predict bust-out fraud.
Bust-out fraud is a growing area of fraud for the financial services industry. For organisations across the globe, bust-out fraud is a very topical issue and the losses incurred are becoming significant.
In the UK, all the major banks have reported an increase in bad debt and provisions in the last two years, part of which could be attributed to this type of fraud.
Identification of bust-out fraud is difficult for many organisations, although Experian’s research shows that there are many strong predictors including current account behaviour and transactional patterns, credit bureau trend data and ‘event’ trigger data.