Fraud within the Financial Services Sector - Bill Trueman bill by dfsiopmhy6

VIEWS: 11 PAGES: 36

									Bill Trueman   bill.trueman@ukfraud.co.uk
“Make everything as
  simple as possible, but
  not simpler”
          (Attitude + Inclination) + Opportunity
Fraud α                Resistance
•People told up to 200 lies a day

• People lied in a quarter of all
  interactions with others

• Of all the people interacted
  with 34% were lied to
• Only 18% of lies were detected
  by others
          (Attitude + Inclination) + Opportunity
Fraud α                Resistance
                 Fraudster – organised attacks
                 Loss of controls
                 Competitors systems better
                 Perceived as easy target
                 New launch without controls
Fraud Velocity




                                                 Stronger product design
                                                 Better deterrents
                                                 Stronger systems - tools
                                                 Well trained people skills

                           Customer Velocity
Fraud Velocity




                                      Fraudster Targeted Attacks – Organised fraudsters
                                      Processes get known and communicated
                  Customer Velocity
                                      Staff collusion
                                      Staff training
                                      Pressure on sales / process / volumes
                                      Fraud levels considered acceptable
                                      New delivery channels
                                      Changes in processes
Fraud Velocity




                 Customer Velocity
                                     Industry Liaison


Prevention Detection                                     Investigation Correction
                                                                                       Recharges
 Policy                Tools                             Case-Management     Process
 Planning              People                            Police              Systems
            Screen
 Design     New                                          Customers           Technology
            Business                                                                      Finance


Strategy               Transaction
                                                                                  Systems/IT
                       monitoring
                                              Analysis               Call
                                                                    Centre
                                                                   Fraud Policy


                         Prevention                  Detection                   Investigation                   Correction

Strategic                    Cross-business awareness                                    Ownership / Accountability
                             Communication & Challenge                                   Appetite
                         Customer Strategy           Availability of Data            Depth of enquiries              Seek Publicity
Tactical
                          New Bus screening            Analysis of Data                   External Investigator - prosecutions

                          Product Activation          Decision on what & when to stop & Charge-off                  Pursue fraudsters

                         ProductCard Design          Rule setting / writing                                        System parameters

           Deterrence Messages and publicity           Decision-making                                                New Systems

                       Product Delivery Channel       Use of Score-cards                                             Adjust customer Messages

                        Authorisation Strategy           Tracking MI                                                 Policy changes

                                                      CBA Maintenance                                                Industry Liaison

                                                                      Reacting Quickly

                                                  1. Risk sharing
Ownership             Business                    2. KPIs                                                     Business
Management            Ownership                   3. Management of Data access, speed of action,              Ownership
                                                     controls, performance reviews
                      usual/essential             4. Control fraud appetite and activity levels               usual/essential
Fraud Policy Elements
                            Fraud Policy Elements
1.   Measuring Fraud Company understands and measures its fraud. It reports fraud
                     losses appropriately and the fraud that it saves.




                                                                                    Prevention
2.

3.

4.
                             Fraud Policy Elements
1.   Measuring Fraud Company understands and measures its fraud. It reports fraud
                     losses appropriately and the fraud that it saves.




                                                                                            Prevention
2.   Product         Company controls the risks and potential for fraud losses within its
     Development     product development and before it underwrites new business.
3.

4.
                             Fraud Policy Elements
1.   Measuring Fraud Company understands and measures its fraud. It reports fraud
                      losses appropriately and the fraud that it saves.




                                                                                             Prevention
2.   Product          Company controls the risks and potential for fraud losses within its
     Development      product development and before it underwrites new business.
3.   Fraud Deterrence Company actively deters fraudsters and makes the company less
                      attractive to fraudsters.
4.
                             Fraud Policy Elements
1.   Measuring Fraud Company understands and measures its fraud. It reports fraud
                      losses appropriately and the fraud that it saves.




                                                                                             Prevention
2.   Product          Company controls the risks and potential for fraud losses within its
     Development      product development and before it underwrites new business.
3.   Fraud Deterrence Company actively deters fraudsters and makes the company less
                      attractive to fraudsters.
4.   Anti-Fraud Ethos Company adopts an anti-fraud ethos throughout the business and
                      establishes strong anti-fraud working practices to make fraud
                      difficult and to prevent fraud loss leakage risks.
                             Fraud Policy Elements
1.   Measuring Fraud Company understands and measures its fraud. It reports fraud
                      losses appropriately and the fraud that it saves.
2.   Product          Company controls the risks and potential for fraud losses within its




                                                                                             Prevention
     Development      product development and before it underwrites new business.
3.   Fraud Deterrence Company actively deters fraudsters and makes the company less
                      attractive to fraudsters.
4.   Anti-Fraud Ethos Company adopts an anti-fraud ethos throughout the business and
                      establishes strong anti-fraud working practices to make fraud
                      difficult and to prevent fraud loss leakage risks.
5.   Automating       Company automates the detection and identification of fraudsters
     Detection of     using data-matching technologies and industry fraud databases in:




                                                                                             Detection & Investigation
     Fraudsters          - New Business Underwriting
                           - Claims of fraud made upon it and its agents by any party
                             (cardholder, corporate body, other parties etc.)
                           - Other customer „touches‟.

6.
                             Fraud Policy Elements
1.   Measuring Fraud Company understands and measures its fraud. It reports fraud
                      losses appropriately and the fraud that it saves.
2.   Product          Company controls the risks and potential for fraud losses within its




                                                                                               Prevention
     Development      product development and before it underwrites new business.
3.   Fraud Deterrence Company actively deters fraudsters and makes the company less
                      attractive to fraudsters.
4.   Anti-Fraud Ethos Company adopts an anti-fraud ethos throughout the business and
                      establishes strong anti-fraud working practices to make fraud
                      difficult and to prevent fraud loss leakage risks.
5.   Automating       Company automates the detection and identification of fraudsters
     Detection of     using data-matching technologies and industry fraud databases in:




                                                                                               Detection & Investigation
     Fraudsters          - New Business Underwriting
                           - Claims of fraud made upon it and its agents by any party
                             (cardholder, corporate body, other parties etc.)
                           - Other customer „touches‟.

6.   Staff/Supplier   Company Corporate Cards protects „non-production‟ areas of
     and Other Frauds business from fraudsters, i.e. through looking for and deterring staff
                      fraud, supplier fraud and other frauds.
                             Fraud Policy Elements
1.   Measuring Fraud Company understands and measures its fraud. It reports fraud
                      losses appropriately and the fraud that it saves.
2.   Product          Company controls the risks and potential for fraud losses within its




                                                                                               Prevention
     Development      product development and before it underwrites new business.
3.   Fraud Deterrence Company actively deters fraudsters and makes the company less
                      attractive to fraudsters.
4.   Anti-Fraud Ethos Company adopts an anti-fraud ethos throughout the business and
                      establishes strong anti-fraud working practices to make fraud
                      difficult and to prevent fraud loss leakage risks.
5.   Automating       Company automates the detection and identification of fraudsters
     Detection of     using data-matching technologies and industry fraud databases in:




                                                                                               Detection & Investigation
     Fraudsters          - New Business Underwriting
                           - Claims of fraud made upon it and its agents by any party
                             (cardholder, corporate body, other parties etc.)
                           - Other customer „touches‟.

6.   Staff/Supplier   Company Corporate Cards protects „non-production‟ areas of
     and Other Frauds business from fraudsters, i.e. through looking for and deterring staff
                      fraud, supplier fraud and other frauds.
7.   Business Impact Company understands and reports on the impact of fraud on
     of Fraud         business measures e.g. P&L, fraud to turnover ratio and losses per
                      card in issue and general performance.




                                                                                               Correction
8.


9.
                             Fraud Policy Elements
1.   Measuring Fraud Company understands and measures its fraud. It reports fraud
                      losses appropriately and the fraud that it saves.
2.   Product          Company controls the risks and potential for fraud losses within its




                                                                                               Prevention
     Development      product development and before it underwrites new business.
3.   Fraud Deterrence Company actively deters fraudsters and makes the company less
                      attractive to fraudsters.
4.   Anti-Fraud Ethos Company adopts an anti-fraud ethos throughout the business and
                      establishes strong anti-fraud working practices to make fraud
                      difficult and to prevent fraud loss leakage risks.
5.   Automating       Company automates the detection and identification of fraudsters
     Detection of     using data-matching technologies and industry fraud databases in:




                                                                                               Detection & Investigation
     Fraudsters          - New Business Underwriting
                           - Claims of fraud made upon it and its agents by any party
                             (cardholder, corporate body, other parties etc.)
                           - Other customer „touches‟.

6.   Staff/Supplier   Company Corporate Cards protects „non-production‟ areas of
     and Other Frauds business from fraudsters, i.e. through looking for and deterring staff
                      fraud, supplier fraud and other frauds.
7.   Business Impact Company understands and reports on the impact of fraud on
     of Fraud         business measures e.g. P&L, fraud to turnover ratio and losses per
                      card in issue and general performance.




                                                                                               Correction
8.   Market           Company maintains an overview of current market offerings,
     Performance /    technology and initiatives, and develops company-wide approaches
     Overview         and stances.
9.
                             Fraud Policy Elements
1.   Measuring Fraud Company understands and measures its fraud. It reports fraud
                      losses appropriately and the fraud that it saves.
2.   Product          Company controls the risks and potential for fraud losses within its




                                                                                               Prevention
     Development      product development and before it underwrites new business.
3.   Fraud Deterrence Company actively deters fraudsters and makes the company less
                      attractive to fraudsters.
4.   Anti-Fraud Ethos Company adopts an anti-fraud ethos throughout the business and
                      establishes strong anti-fraud working practices to make fraud
                      difficult and to prevent fraud loss leakage risks.
5.   Automating       Company automates the detection and identification of fraudsters
     Detection of     using data-matching technologies and industry fraud databases in:




                                                                                               Detection & Investigation
     Fraudsters          - New Business Underwriting
                           - Claims of fraud made upon it and its agents by any party
                             (cardholder, corporate body, other parties etc.)
                           - Other customer „touches‟.

6.   Staff/Supplier   Company Corporate Cards protects „non-production‟ areas of
     and Other Frauds business from fraudsters, i.e. through looking for and deterring staff
                      fraud, supplier fraud and other frauds.
7.   Business Impact Company understands and reports on the impact of fraud on
     of Fraud         business measures e.g. P&L, fraud to turnover ratio and losses per
                      card in issue and general performance.




                                                                                               Correction
8.   Market           Company maintains an overview of current market offerings,
     Performance /    technology and initiatives, and develops company-wide approaches
     Overview         and stances.
9.   Group and        Company agrees common fraud goals and strategy across the
     Industry Fraud   business, the wider company and across the industries in which it
     Strategy         operates.
   No Fraud Ownership at board level
   Fraud is a function of department A
   Chasing latest in-vogue solution
   Focus on particular fraud types
   Too much reliance on our people
   Too little reliance on our people
   No early warning systems
                                                                                       Pre-meditative
                                         Opportunistic


Type of Claim                                                                               Organised                 Organised
                     Genuine                   Naïve                 One-Off
                                                                                             Own ID                    New ID


                                                                                                                      False /stolen identity
                                          Negligent                Pre-meditative
                                          Lack of awareness                                 Professional Fraudsters
                                                                   First timers
                                          Stupid                                            It is their “business”
Characteristics   Strong honesty signs
                                                                   One-offs
/ Mindset                                 Don‟t like lying         Prior claims easy
                                                                                            Confident
                                          / uncomfortable                                   Know the processes
                                                                   Easy Culture
                                          Want it to “go away”                              Look like typical genuine claimants
                                                                   Peer advice

Identifiable                              VERY LOW                 LOW                      MEDIUM                    VERY LOW
                                          Genuine history.         Make claims look         May have prior            Make claims look
from existing                             Normal profile           genuine                  claims on CUE             Genuine
scoring                                   Potential exaggeration   Behavioural              (KIV address              Not on any
claims                                    or false details         differences only         changes)                  databases.

Behavioural                                YES                     YES                      YES - But harder to find as practiced liars
differences                                Stronger signals        Strong signals

Fraudster                                  Often one-off
Progression
Frequency /                                Volume – HIGH           Volume – LOW             Volume – LOW             Value - HIGH
Size                                       Value - LOWER           Value - MEDIUM

                                          Behavioural Interviews   Behavioural Interviews   Fraudster databases       Fraudster Databases
Strategies                                Operational Processes    DETERRENTS               Prior Genuine history     Data-matching
                                          DETERRENTS               Up-front Data-bases      checking                  Identity Validation
                                          Up-front databases                                Data-matching             Cross-industry co-op
                                                                                            Address links /aliases
Credibility of                   Avoidance of issues
account
                 CREDIBILITY   AVOIDANCE




                 LANGUAGE       DETAIL



   Changes in language              Lack of detail
                 Lack of commitment…
Disassociation
                   • Nervous signals
                   • Bolstering
                   • Fast forward phrases
Use of pronouns

    “My baby, the baby, my baby”

    “I always lock it.”

    “The car is missing”

    “The wife was....”
Use of broad Language:
  Q “How was the vehicle secured?”

  A “I always lock it.”
Use of generalisation statements:
         “...as a general rule…”

         “...in most cases…”

         “…I usually…”
Use of memory qualifying language:

        “…to the best of my knowledge….”

        “…at this point in time…”

        “…as far as I can recall…”
Use of omission qualifiers:


             “…I think…”
             “…I believe…”
Use of Negative Language:

  “I’m not committing fraud.”
  “I haven’t lied to you...”
  “I haven’t done anything wrong.”
  “I’m not that kind of person…”
  “I’m not a fraudster you know…”
  “I know you don’t believe me…”
Concealed/Missing Information:

       “…after…”
       “…later on…”
       “…from there…”
       “…at which time…”
       “…before I knew it…”
       “…next thing I remember…”
Watch this video
   Board level fraud ownership/understanding
   It is everyone’s job
   No single-bullet solutions
   Focus on all types of frauds
   Build business cases for latest Technologies
   Develop out people skills
   Develop early warning systems
Bill Trueman   bill.trueman@ukfraud.co.uk

								
To top