Developing Tools to Monitor Stolen Identity Accounts

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As mortgage fraud activity continues to be a persistent problem throughout the country, information and data companies have developed new tools in order to monitor fraudsters and prevent them from stealing not only money from borrowers, but their identity, too.

At the end of June, credit research firm Experian made an addition to its Precise ID suite of authentication and fraud detection services by launching a system that helps customer management determine if an individual’s identity is possibly linked to a fraudster.

By expanding the Precise ID suite, this customer management tool helps reduce losses and customer maintenance costs by assessing identity fraud risk in existing accounts.

Fraud in existing accounts occurs when an identity thief gains access to, manipulates and then misuses a victim’s existing credit, debit, bank, credit union, trading, retirement or other account. According to Javelin Strategy & Research, $37 billion in identity fraud occurred last year nationwide, including approximately $20 billion in existing accounts.

“In today’s challenging credit environment, fraudsters are attacking organizations from many different angles. These strategies include using stolen identities to fraudulently establish new credit relationships or taking over existing accounts,” said Charles Chung, president of Decision Analytics North America at Experian. “Solely checking identities at the time of application is no longer enough to protect customers and institutions themselves from the losses generated by existing account fraud.”

Experian’s customer management tool allows organizations to track an individual’s account activity to detect if anything spontaneous has occurred since the account opened. The tool evaluates and scores identities to determine the likelihood that a customer’s identity has been compromised and poses a threat of fraud loss.

Scores range from 1 to 999 and are created based on segmentation of risky accounts. If a reviewer notices a high score, they can adjust account activity over time to evaluate identity risk associated with questionable accounts and customers.

Additional features of the product contain score factors that can predict attributes as to why an account may have fraudulent activity, allowing organizations to operate more efficiently by working on accounts that warrant monitoring because of a high score.

The customer management network assesses more than two million identity transactions every day, providing up-to-date fraud threats associated with possible high-risk use of an individual’s identity.

“Manually reviewing accounts to detect fraud can be time-consuming and resource-intensive, especially for organizations with limited resources,” said George Tubin, senior research director, TowerGroup’s retail banking and cards. “Financial services institutions should seek out solutions that automate the review process to help reviewers identify high-risk accounts more quickly and accurately with fewer false positives. This leads to improved productivity, higher customer service levels and faster ROI.”

Another company that has made updates to track if fraudsters may be using multiple identities is Santa Ana, Calif.-based CoreLogic.

The analytics firm has enhanced its Web-based LoanSafe Fraud Manager platform by including LexisNexis’s FraudPoint scores and attributes in order to improve risk-related decisions for mortgage loan originators.

“When dealing with risk mitigation and fraud prevention initiatives in the mortgage industry, the more you know about a person, the better assessment you can make about the likelihood that the applicant information is false,” said Avivah Litan, vice president and analyst at Gartner, a technology and research firm based in Stamford, Conn. “It will be prudent for lenders to incorporate solutions that intelligently analyze consumer identity data and take the leap from strategic aspiration to curtail fraud related losses, and make it operational.”

FraudPoint reveals fraud characteristics not evident in standard verification and validation processes by catching inconsistencies in applicant and account information. The LexisNexis technology uses more than 10,000 data sources to link and match consumer identification and asset data, like names, addresses and Social Security numbers.

The technology then creates a three-digit score, based on a collection of public records, which ranks individuals according to their calculated risk to commit fraud. Besides the score, there are also six prioritized reason codes that can isolate high-risk applicants, suggest automatic approvals and streamline exception processing.

“FraudPoint score and FraudPoint attributes from LexisNexis enhance the CoreLogic next-generation platform with authoritative identity data that can be used with lender-specific business rules to evaluate and investigate mortgage fraud risk,” said Tom Brown, vice president of financial services at LexisNexis. “The unique capability that LexisNexis brings is the ability of our FraudPoint attributes to expose unique identities and risks associated with Social Security numbers, addresses or names and to include and consider life events that continuously evolve over time and are predictive in determining fraud outcomes.”

By adding LexisNexis data into the LoanSafe Fraud Manager solution, lenders can effectively choose which loans should be worked on according to the score and lets them customize their criteria based on best practices saving operational costs and fraud loss expense.

Tim Grace, senior vice president of product management and analytics at CoreLogic, said over 10% of identity issues account for fraud within the mortgage industry today. He added that integrating identity data from LexisNexis shows that the company is “committed to delivering powerful risk mitigation products for mortgage lenders.

“The addition of vital consumer-identity behavior information, identity flags and attributes empowers mortgage lenders that use the next generation LoanSafe Fraud Manager platform to drive more efficient, actionable alerts, to more quickly respond to evolving regulations and to stop emerging fraud schemes,” Grace said.

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