First-party fraud involves fraudsters who apply for credit cards, loans,
overdrafts and unsecured banking credit lines with no intention of paying
them back. It is a serious problem for banking institutions. U.S. banks lose
tens of billions of dollars every year (1) to first-party fraud, which is
estimated account for as much as one-quarter or more of total consumer credit
charge-offs in the United States (2). It is further estimated that 10%-20% of
unsecured bad debt at leading US and European banks is misclassified, and is
actually first-party fraud (3).
Contrary to third-party fraud, where fraudsters use stolen identities and
there are actual people who are impacted, first-party fraud uses "synthetic"
identities, which are identities fabricated using bits and pieces of genuine
data along with other fake pieces of information.
The surprising magnitude of these los... (more)
Catching fraud rings and stopping them before they cause damage is a
challenge. One reason for the challenge is that traditional methods of fraud
detection are either not geared to look for the right thing: in this case,
the rings created by shared identifiers. Standard instruments-such as a
deviation from normal purchasing patterns- use discrete data and not
connections. Discrete methods are useful for catching fraudsters acting
alone, but they fall short in their ability to detect rings. Further, many
such methods are prone to false positives, which creates undesired side
Banks and Insurance companies lose billions of dollars every year to fraud.
Traditional methods of fraud detection play an important role in minimizing
these losses. However increasingly sophisticated fraudsters have developed a
variety of ways to elude discovery, both by working together and by
leveraging various other means of constructing false identities.
Graph databases offer new methods of uncovering fraud rings and other
sophisticated scams with a high-level of accuracy, and are capable of
stopping advanced fraud scenarios in real-time.
While no fraud prevention measures c... (more)
ISACA, the Information Systems Audit and Control Association just surveyed
1 529 of its members across 50 countries in EMEA.
It turns out that UK businesses are leading Europe on Cloud Adoption 40% to
33%. But a whopping 35% of respondents do not plan to use Cloud for any IT
services (actually 35.6% in Europe and 31.8% in the UK). This is a huge
impediment to the growth of ItaaS – IT as a Service, such as SaaS, IaaS and
PaaS respectively Software as a Service, Infrastructure as a Service and
Platform as a Service.
Let’s spin this another way: 60% of respondents are not using Clou... (more)
(Today, Part 3: anatomy of collusion-based first party bank fraud, a.k.a. how
fraudsters work together to defraud a bank. Do not try this at home!!)
While the exact details behind each first-party fraud collusion vary from
operation to operation, the pattern below illustrates how fraud rings
A group of two or more people organize into a fraud ring The ring shares a
subset of legitimate contact information, for example phone numbers and
addresses, combining them to create a number of synthetic identities Ring
members open accounts using these synthetic identities... (more)