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Exploring the idea of collaboration in the fight against fraud

TransUnion
Blog Post10/08/2018
Business Fraud and Identity Management Research

Our Evolution of Fraud Summit brought together industry practitioners to create a platform to share ideas and insights for creating cutting-edge technology and people-centred responses to fraud threats.

During the summit a dedicated Collaboration in the Fight Against Fraud breakout session included experts from the Government, the Post Office, TransUnion and the Women’s Fraud Network, and brought to life the fight against fraud. In this blog we’ll explore three themes that emerged during the session.

1. Expertise, tools and data

Fraud is intricate, insidious and in our interconnected world, hard to track and police.

Mark Cheeseman, deputy director of Cross Government Fraud and Error Policy in the UK’s Cabinet Office spoke of his ambition to create a collaborative fraud prevention framework:

“Government is complicated. There are lots of organisations. Fraud is a hidden crime. Unless you’re looking for it, it’s not self-evident. Government has hundreds, if not thousands, of different payment streams and it’s difficult to use a single tool.”

Fraud is estimated to cost the Government £31bn – £49bn every year and a key challenge is that fraudsters are legally entitled to use the services within the organisation they are defrauding. They are subject to the same data protection regulations as everyone else. Using data to track them down is difficult and reflects a common issue where “…businesses are able to understand a level of detail about fraud attacks, but rarely get their hands on personal information or names. This demonstrates the advantage fraudsters have neatly.”

Solving this is one of Cheeseman’s priorities: “We’re developing training to get the skills we don’t [currently] have… There are lots of ways to use Data Analytics in the public sector but we struggle with the diversity of it. Capability is sparse.”

Part of his approach has been to set up the Counter Fraud Centre of Expertise in the Cabinet Office that brings together people from across Government and external groups, such as banks or academia, to create best practice guidance and build a structure that codifies the whole of Government fraud practice so it doesn’t have to start from scratch every time.

To get there they’ve embarked on a series of pilot implementations that bring a ‘fail fast, learn fast’ mentality to an institution not known for its agility and work towards a collaborative framework to track, identify and prosecute fraud across the organisation.

Takeaway:

Bringing disparate units together to collaborate and train to a standard can foster real understanding of the problem. A central resource of intelligence and expertise will help generate powerful solutions. If Government can create a universal fraud process that can be applied to the enormously diverse set of conditions it operates under there’s hope for the rest of us.

2. Universal ID uniting on and offline to tackle Keyser Söze fraudster

One of the key questions to emerge in the session was; what happens when the online customer disappears like Keyser Söze? There’s a digital paper trail from emails to web browsing and online banking but then…’puff!’. Nothing. The customer is offline and invisible. Tying together on-and offline activities for the purposes of identifying genuine and fraudulent behaviours is a major goal across many organisation.

“Identity is central to the fight against fraud and the UK…has a huge problem with it,” according to Angus Sim, the Post Office’s business development director.

Alongside its digital presence the Post Office boasts 11,500 outlets – a number expected to rise due to 2017’s banking framework agreement that allows it to process bank transactions for personal and most small to medium enterprises (SMEs) on behalf of a number of the UK’s high street banks.

For Sim: “The branch network is the frontline battle against fraud. A lot of effort goes into training staff so that when they see something suspicious, they can collaborate with police.”

He retold a story of a counter assistant foiling a fraud attempt when they noticed a regular customer frequently withdrawing unusually large amounts of cash. “If the customer had gone into a different branch, it wouldn’t have been caught. That’s the importance of collaboration.”

For Sim the Post Office’s relationships with other organisations present an opportunity to fight fraud. For example, collaboration between the Post Office and the Government has created Gov.UK’s Verify scheme that allows users to create a digital identity to verify who they are when accessing a range of services such as self-assessment or driving licences. It’s expected that the scheme will move into the offline world which will give users a seamless transition between on and offline interactions, while protecting them against fraudulent use of their identity.

Takeaway:

As David Birch has argued identities are one of the key ways of fighting fraud. Fraud experts need to work together to leverage relationships and partner with third-party providers to build out solutions that solve universal identity issues and create the reporting mechanisms needed.

3. Mitigating risk, maximising convenience

In our CX-focused world convenience and accessibility are sought after. Single access methods such as Open Banking and the Second Payment Services Directive (PDS2) that are designed to provide clarity are likely to appeal to customers who have multiple bank accounts, online insurance products, identity products and logins. By opening up the sharing of financial and other normally sequestered data, consumers can have single access and a view of their complicated financial lives.

Naturally, such openness begs the question – where are the fraudsters?

Ben Thackwray, a consultant at TransUnion, acknowledged that Open Banking would be attractive to fraudsters: “To access Open Banking, third parties have to be registered with the Financial Conduct Authority (FCA) but data is a very powerful tool for fraudsters and it’s really a question of when not if.”

This drew gasps from the audience, however, as made clear throughout the event, organisations need to be pragmatic in that there’s no fool-proof fraud solution. Thackwray was joined on stage by consultant Richard Morton who walked the audience through plausible fraud scenarios and approaches that might solve or mitigate further against fraud.

Morton cited the idea of Open Banking’s core function of sharing customer data between third parties to create a consolidated view as having the potential for misuse. In his view, however, it is a more secure option than the current alternative. In addition a solution such as CallValidate, he suggested, could reinforce provider confidence that they are dealing with a bona fide account holder.

Cyberthreat or malware are other concerns but Morton believes an ecosystem of common standards makes this threat easier to manage and a product such as Device Risk offers a further line of defence.

Takeaway:

We should remain ambitious and develop technologies that improve the customer experience whilst accepting the amorphous nature of fraud means that we need to find ways to make technology – new and existing – as secure as possible. In this case Open Banking, as an alternative to current banking interactions, may well be an improvement even if it is likely to be in the crosshairs of fraudsters.

Round-up

Ultimately, the key takeaway was that collaboration in terms of data, infrastructure and experience is an opportunity for companies, legislators and governments to build an effective line of defence against the fraudsters. To discover more on current thinking around fraud download our 2018 report – Building a Fraud Fortress.

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