Everyone has become a target for the fraudsters | BAE Systems | Cyber Security & Intelligence

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Everyone has become a target for the fraudsters

Application Fraud and Account MonitoringIt’s a refrain that’s heard all too often: “I keep my head well below the parapet when it comes to being a victim of fraud, so I doubt anyone will come after me.” There’s this widely held and disturbing belief still that, in the main, fraudsters go after the ‘big names’ – the ones that make the media headlines, such as Yahoo, Ashley Maddison and TalkTalk – because that’s where the rich pickings are. But the reality is different: everyone is now a target. In our changed world, fraudsters can steal or buy real identities off the dark web for a pittance or create synthetic IDs to apply for bank accounts.
According to one recent report, the total number of victims of fraud in the US in 2015 remained steady at 13.1 million and the total amount stolen slightly down, at $15 billion. However, that stability masks a major shift in the victim profile that should concern all of us; as EMV (EuroPay, MasterCard, Visa) becomes more widespread, the emphasis has swung heavily from counterfeit card fraud to new account fraud.
Why? For several reasons. First, banks are constantly looking to launch new, innovative products to entice customers, with credit for some products, such as credit accounts, instantly available. This scenario is like shooting fish in a barrel for the fraudsters, as banks rely on the information provided at the time of application and data held by credit agencies to confirm the identity of an applicant. Fraudsters then max out the credit lines available to them and disappear with the funds. The bank sends the account to the collections department and wastes more money – and resources – chasing for payment. The fraudsters then surface over and over again under a different identity, inflicting further damage.

How bad is it?

The CIFAS National Fraud Database, which examined attacks against 261 organisations in the UK, showed that identity fraud in 2015 accounted for more than half (53%), totalling 169,592 incidents against 113,839 in the previous year.  Without the right preventive measures in place, the fear is that attacks such as the $200 million credit card fraud scam – when a crime ring invented 7,000 fake identities to obtain tens of thousands of credit cards – will become commonplace.
It doesn’t have to be like that. At the application stage, Social Network Analysis can be readily and easily used to create all of the relationships between the data that a bank has to detect any signs of identity manipulation or hidden control in the identity of an applicant. The activity of the customer and account may then be constantly monitored to predict when a customer might ‘bust out’ or commit fraud. The result is that potential fraud losses are greatly reduced, with round-the-clock account monitoring built in to the process. Surely much better than keeping your head down and hoping the fraudsters can’t see you.
Carl Ottman, Product Manager, Financial Crime February 1 2017