Latest trends in serious and organised identity fraud Gareth Jones Fraud Products Director -...

Latest trends in serious and Latest trends in serious and organised identity fraudorganised identity fraud

Gareth JonesFraud Products Director - Experian Ltd

[email protected] 992 2101

Latest trends in serious and Latest trends in serious and organised identity fraudorganised identity fraud• The methodology used by the fraudsters with The methodology used by the fraudsters with

reference to case examplesreference to case examples

• The impact of the fraud in terms of value of The impact of the fraud in terms of value of loss and spread of victimsloss and spread of victims

• Good practice in the management of mass-Good practice in the management of mass-multiple fraud cases of this sortmultiple fraud cases of this sort

• Gaps in the fraud detection process that Gaps in the fraud detection process that could be improved uponcould be improved upon

• Opportunities for fraud preventionOpportunities for fraud prevention

• Taking care of the victimTaking care of the victim

Personal identity fraudPersonal identity fraud• ImpersonationImpersonation

Current addressCurrent address

Previous addressPrevious address

DeceasedDeceased

• False identityFalse identity

False identity fraudFalse identity fraud

• Account take-overAccount take-over

Transaction fraudTransaction fraud

ExamplesExamples

Three short case studiesThree short case studies

1. Fraudulent placement of data1. Fraudulent placement of data See Credit Today crime supplement articleSee Credit Today crime supplement article

2. Fraudulent acquisition of data 2. Fraudulent acquisition of data Direct to ConsumerDirect to Consumer

3. Fraudulent acquisition of data3. Fraudulent acquisition of data Recent NHTCU success storyRecent NHTCU success story We supported the prosecution of these We supported the prosecution of these

fraudsters - pleaded guilty, total 15.5 fraudsters - pleaded guilty, total 15.5 years imprisonmentyears imprisonment

Case Study - empty house Case Study - empty house fraudfraud• West African fraud ringWest African fraud ring

Minimum of eight involved Minimum of eight involved 6 men 2 women6 men 2 women

• IT literate - 4 had degrees, 3 of those IT IT literate - 4 had degrees, 3 of those IT degreesdegrees

• Persistent offenders - on bail for other fraudsPersistent offenders - on bail for other frauds

• London areaLondon area

• Access to good forgersAccess to good forgers

• Formed companies to launder proceedsFormed companies to launder proceeds Properly formed, CCL, IC registered, Properly formed, CCL, IC registered,

Accommodation addressesAccommodation addresses

• Business premises to operate front companyBusiness premises to operate front company

Case Study - empty house Case Study - empty house fraudfraud• Identification of addresses - mailing lists for empty Identification of addresses - mailing lists for empty

propertiesproperties

• Identify previous occupant - Electoral Register - no Identify previous occupant - Electoral Register - no adverse - no access to premisesadverse - no access to premises

• Forged proofs of identity / addressForged proofs of identity / address

• Strategy for collecting mail - re-direction to Strategy for collecting mail - re-direction to forwarding address, use of accommodation forwarding address, use of accommodation addressaddress

• Broaden identity - employment / bank / telephone Broaden identity - employment / bank / telephone detailsdetails

• Face to face application for banking facility - Face to face application for banking facility - inexact impersonationinexact impersonation

• Broaden relationship and fully utilise all facilitiesBroaden relationship and fully utilise all facilities

• Dispose of incriminating evidenceDispose of incriminating evidence

Quantity and cost of identity Quantity and cost of identity fraud - nationallyfraud - nationally• UK assessment of UK assessment of

ID fraudID fraud

• Part of Government Part of Government Entitlement Card Entitlement Card White PaperWhite Paper

• Full exploration of Full exploration of identity fraud identity fraud issues, costs and issues, costs and views of disparate views of disparate market sectorsmarket sectors

Total £680m

What you won’t hear!What you won’t hear!

• Significant percentage of identity fraud is Significant percentage of identity fraud is preventedprevented

• CIFAS statistics:CIFAS statistics: 2002 - 75%2002 - 75% 2003 - 90%2003 - 90%

• Deceased impersonation:Deceased impersonation: 2001 - 5,0002001 - 5,000 2002 - 9,0002002 - 9,000 2003 - estimate 16,0002003 - estimate 16,000

Identifying likely victims:Identifying likely victims:Bin raiding researchBin raiding research• Anecdotal evidence of activity in Nottingham Anecdotal evidence of activity in Nottingham

areaarea

• National survey of local authorities revealed National survey of local authorities revealed significant majority received complaints significant majority received complaints

• Initiated arm’s-length research (MEL) with Initiated arm’s-length research (MEL) with involvement of Police and Nottingham City involvement of Police and Nottingham City CouncilCouncil

Our sampleOur sample

• 1 week’s waste from 5 different areas using 1 week’s waste from 5 different areas using MOSAIC socio-economic profilingMOSAIC socio-economic profiling

A: High incomeA: High income (94)(94) C: Blue collar owners C: Blue collar owners (75)(75) D: Low rise council D: Low rise council (65)(65) F: Victorian low statusF: Victorian low status (89)(89) H: Stylish singles H: Stylish singles (91)(91)

• Waste from each sample household collected Waste from each sample household collected separatelyseparately

Sorting and analysisSorting and analysis

• Each bag opened Each bag opened separatelyseparately

• Documents filteredDocuments filtered

• No personal data was No personal data was recordedrecorded

• Type and condition of Type and condition of each document listedeach document listed

• All filtered documents All filtered documents destroyed as confidential destroyed as confidential wastewaste

Headline resultsHeadline results

• Rubbish bags containedRubbish bags contained no relevant material 14%no relevant material 14% full name and address 72%full name and address 72% telephone number 6%telephone number 6% date of birth 2%date of birth 2% card number 20%: of those with expiry date 80%card number 20%: of those with expiry date 80% signatures 13% signatures 13% bank account information 27%bank account information 27% utility bills 16% utility bills 16% official letters 25%official letters 25%

Summary of findingsSummary of findings• Stylish singles at greatest riskStylish singles at greatest risk

throw away more sensitive information; more throw away more sensitive information; more people per householdpeople per household

• Full name and address easy to findFull name and address easy to find no one group at greater riskno one group at greater risk

• Rare attempts made to destroy material (8% Rare attempts made to destroy material (8% attempted - mostly unsuccessful)attempted - mostly unsuccessful)

attempts usually limited to card numbersattempts usually limited to card numbers

• Card number and bank account information Card number and bank account information commoncommon

easy to combine material to put together a easy to combine material to put together a picture of a person’s lifepicture of a person’s life

Communicate findings: Communicate findings: PR objectivePR objective• Intention of research Intention of research

waswas to provide evidence to provide evidence

of need for actionof need for action to formulate a to formulate a

nation-wide fraud nation-wide fraud prevention messageprevention message

to work initially with to work initially with BBC Hard Cash and BBC Hard Cash and then other media to then other media to broadcast messagebroadcast message

Good practiceGood practice• Have a fraud strategyHave a fraud strategy

• Review and follow planReview and follow plan

• Identify point of failure and address itIdentify point of failure and address it

• Look for other unrelated casesLook for other unrelated cases

• Adopt an ethical approach - involve the PoliceAdopt an ethical approach - involve the Police

• Identify the victims - consumers and businessIdentify the victims - consumers and business

• Dry run consumer literatureDry run consumer literature

• Match resources to levels of outward Match resources to levels of outward communicationcommunication

• Have a PR plan, scripts, statementsHave a PR plan, scripts, statements

Gaps in fraud prevention Gaps in fraud prevention process / Prevention process / Prevention opportunitiesopportunities• Victims suddenly credit activeVictims suddenly credit active

• Miss-match date of birth to actual ageMiss-match date of birth to actual age

• Miss-match date of birth to ‘stage’ of Miss-match date of birth to ‘stage’ of forenameforename

• Not confirmed BT at current addressNot confirmed BT at current address

• Re-direction on at currentRe-direction on at current

• Forgeries - same serial numbersForgeries - same serial numbers

• Deceased file matchesDeceased file matches

• Employment - new business, accommodation Employment - new business, accommodation addressaddress

Other inferences within an Other inferences within an applicationapplication• Applicant profile - do they fit the product?Applicant profile - do they fit the product?

• Amount of facility - highest possible amountAmount of facility - highest possible amount

• Day? Time? - just before closingDay? Time? - just before closing

• Duplicates - at address levelDuplicates - at address level

• Early extension - new products soldEarly extension - new products sold

• E-mail - free ISP - can check IP to areaE-mail - free ISP - can check IP to area

Prevention - relevance of new Prevention - relevance of new channelschannels• Online / Batch / Retrospective reportingOnline / Batch / Retrospective reporting

• Internet channel opened up online fraud Internet channel opened up online fraud prevention services to SME’sprevention services to SME’s

• Made business more competitive, Made business more competitive, requirement to improve SLA’srequirement to improve SLA’s

• Impact - trade off between advances in fraud Impact - trade off between advances in fraud prevention and expectations of prevention and expectations of improvements in the business processimprovements in the business process

• Risk is that natural tension between these Risk is that natural tension between these competing parts of a business can lead to competing parts of a business can lead to ‘accidents’‘accidents’

NoBus

ines

s

Tension between prevention and Tension between prevention and productionproduction

Fra

ud P

reve

ntio

n

New Business ‘Production’

BADBus

ines

s

High Risk

Business

Parity Zone

Low Risk

Business

NoBus

ines

s

Trading off added prevention for increased Trading off added prevention for increased productionproduction

Fra

ud P

reve

ntio

n

New Business ‘Production’

BADBus

ines

s

Un-rocked Boat

Other dataCIFASSuspectsGAINDeceasedRedirectionsSanctionsEtc

Public dataERCCJ’sBankruptcies IVA’sNotice of Correction

Extended Credit ApplicationsNameAddressDate of birthBiographical data

Credit ApplicationsNameAddressDate of birthProductPerformance

Credit AccountsNameAddressDate of birthProductPerformance

Fraud Data MatchingFraud Data Matching

New Application

NameAddressDate of birthTelephonePrevious addressBank Sort / Acct No.Etc

Existing AccountsNameAddressDate of birthTelephoneBank Sort /Acct NoEtc

Exact / Fuzzy

Miss - Match

Validity Match

Velocity Match

Exclude Match

Results EvaluatedDecisioning - ScorecardClient side / Bureau sideReferral policy

Fraud matchingFraud matching

Detecting ExistingFrauds

Detecting ExistingSuspects

Preventing new Frauds

Detecting fraudsin clean accounts

Online Batch

CIFAS CIFAS / National Hunter / Hunter

Exception / Caution Files

Local / Corporate Hunter

Detect

Data sources

Fraud Scorecards

National Hunter / Local Hunter

CIFAS trawl reports National Hunter

ApplicationProcessing

Fraud/MoneyLaundering

Review

Client environment Experian environment

New BusinessStrategy Manager

BureauData

DetectData

Typical Detect processing flow diagram

DetectProcessing,Rules andFraud Score

(*

:

Cust

omer

app

licat

ion

CreditDecision

Fraud/MoneyLaunderingDecision

1

23

45

6

7

8

910

11

12

13

1

2

3

4

5

6

7

8

9

10

11

12

13

Customer applies

Application captured

Data passed to bureau

Credit data returned

Credit decision taken

Credit score decline

Data passed for fraud decision

Detect processing

Fraud decision taken

Fraud ‘passes’ returned

Fraud referrals

Outcome of fraud referral communicated

Final decision

Why?Why?• Maintain consumer confidence Maintain consumer confidence

• Operational costs of administering case are Operational costs of administering case are greater in reaction to a substantive fraud, than greater in reaction to a substantive fraud, than if preventedif prevented

Human resource costsHuman resource costs Data clean upData clean up Liaison with victimLiaison with victim Case handlingCase handling Court case - preparation of statementCourt case - preparation of statement

• Reputational damageReputational damage Poor PRPoor PR Impact of not being trustedImpact of not being trusted

Victims of fraudVictims of fraud

• Dedicated Experian team established Dedicated Experian team established Summer 03 Summer 03

• 300-400 hours to clean up the mess300-400 hours to clean up the mess

• £5k-8k costs£5k-8k costs

• 400 cases recorded since September 03400 cases recorded since September 03

• Previous address fraud – 20 months to Previous address fraud – 20 months to discoverdiscover

• Average fraud £1400 per caseAverage fraud £1400 per case

• Experian leading NCOA initiative Experian leading NCOA initiative

Prevention - self help - Prevention - self help - consumersconsumers

• Obtain a regular copy of Obtain a regular copy of your credit fileyour credit file

• Statutory nominal fee £2Statutory nominal fee £2

• Monthly repeat copy - Monthly repeat copy - reduced pricereduced price

• New online channel - New online channel - WiseConsumer and WiseConsumer and CreditExpertCreditExpert

• Dedicated Victims of Fraud Dedicated Victims of Fraud service - to assist victims service - to assist victims affected by fraudsters affected by fraudsters using their nameusing their name

Victim - relevance of dataVictim - relevance of data• Transparent - every individual has a right to Transparent - every individual has a right to

see data about themselvessee data about themselves

• Legal requirement for accuracy, relevance etc.Legal requirement for accuracy, relevance etc.

• Accessible - easy to retrieve and report uponAccessible - easy to retrieve and report upon

• Immediate - usually very quick to deliverImmediate - usually very quick to deliver

• Delivers knowledge - allows the individual to Delivers knowledge - allows the individual to assess their statusassess their status

• Therefore data can help an individual protect Therefore data can help an individual protect themselves from the impact of ID fraudthemselves from the impact of ID fraud

Know if someone is looking at their dataKnow if someone is looking at their data Take immediate steps to reduce damageTake immediate steps to reduce damage

Victim - relevance of online Victim - relevance of online channel - examplechannel - example

• Traditional - WiseConsumerTraditional - WiseConsumer

• New - CreditExpertNew - CreditExpert

• Allows individuals to access Allows individuals to access their credit report onlinetheir credit report online

• Ongoing file monitoring and Ongoing file monitoring and alertsalerts

• Mix of systems and physical Mix of systems and physical KYC procedures prevent KYC procedures prevent fraudfraud

• Immediate and without delayImmediate and without delay

CreditExpert launched 13 CreditExpert launched 13 SeptemberSeptember

CreditExpert - Member centreCreditExpert - Member centre

CreditExpert - File alertsCreditExpert - File alerts

Latest trends in serious and Latest trends in serious and organised identity fraudorganised identity fraud

Thank you!Thank you!

Any questions?Any questions?

Gareth JonesFraud Products Director - Experian Ltd

[email protected] 992 2101

Latest trends in serious and organised identity fraud Gareth Jones Fraud Products Director -...

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