Top Fraud Prevention Tips Based on Lessons Learned in 2017
Greetings fraud fighters! As we close out the year, I thought it would be appropriate to summarize some of the top lessons I learned from my research, professional experiences, and travel during 2017.
Get everyone talking! Many companies have multiple systems, on multiple platforms, being used in different applications. In short, none of the systems are talking to one another. It is absolutely critical in counter fraud to make sure you are harnessing the true power of all of your technological systems and bridging this information together. I have worked with large companies who have the latest and most advanced systems and data capabilities; however, these systems are set up in a silo structure, which prohibits them from reaching the full potential of their data capabilities. Imagine a financial services company that offers auto insurance and banking loans and how beneficial it would be to bridge incidents of auto theft with loan applicant data. In other words, it would be extremely useful to know that a policyholder who suffered an auto theft was also in a declining financial state and was late on loan payments. In mid to smaller sized companies it seems that many are still operating on legacy systems, which bring increased challenges when trying to maintain pace with the contemporary fraudster.
Keep an eye on the robots! We have all heard of the “man vs. machine” analogy in our world; how smarthomes, smartcars, and smarteverything is taking over. This is quite a ride we are embarking on; make sure you are maintaining a close eye on how this technology will affect our fraud world. In my opinion, one of the biggest challenges we will face with the IoT is the legal ramifications of these computer driven devices. Ponder culpability if the smart car that was driving itself around a curve mis-judges the calculation and strikes a parked car. Is the driver still liable, the vehicle manufacturer, or the multitude of companies that could have been involved in designing the specific steering module?
Harness information! With each day, the immense amount of data being generating is incredible; ensure that your company is utilizing this power by using technology to harness this. The gap is growing between carriers that effectively use this data and those that don’t. Don’t be left behind, make sure you are leveraging the power of technology in your fraud prevention. There is no doubt that investigative units still need “boots on the ground” work done on a regular basis; however, this work can be significantly streamlined by utilizing technology. As a most simplistic example, I recall my early days as a field investigator having to verify commercial policy information and travel to an insured’s physical address to view the premises. There are many times that if I had access to Google Maps satellite or street view, I would not have had to spend significant time in the field as I could have easily obtained a visual through my laptop, without leaving my office.
Look for the leaky faucet! We are doing a satisfactory job at identifying larger scale, organized cases that scream fraud, but we are missing the mark on those smaller cases that slip through the cracks. These cases cause equivalent financial impact as they are being missed with greater frequency. Thus, carriers need to ensure that they have the proper systems and flags in place to identify these cases and develop the proper protocol for early identification. As companies look to streamline the claim and settlement process, focus is taken away from fraud identification. Companies that optimize process are seeing incredible ROI on these systems as they assist with processing claims quicker and increase customer retention and satisfaction. However, during this process, fraud detection is often not considered; this is a significant mistake. The research has revealed that many fraudsters are taking advantage of this low detection standard and committing fraud in lower monetary amounts but with higher frequency. In the long term, this pattern creates significant losses that are often not realized.
I hope everyone has a great 2018!
Dr. Fraud