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Which schemes, scams and trends are financial fraud investigators seeing most often in 2018? We joined the International Association of Financial Crimes Investigators (IAFCI) Minnesota/Dakotas Chapter at their annual conference to learn more about the most compelling topics in fraud-fighting today.

The IAFCI Fall Conference is attended by multiple fraud investigators from the private sector, in addition to white-collar crime investigators from law enforcement. The conference focused on insights from industry leaders in financial services, including Ameriprise, Allianz, U.S. Bank and more. Key discussion topics included:

Fraud across multiple channels

Investigators revealed how fraudsters exploit different communications channels to perpetrate financial fraud, primarily account takeover (ATO). Fraudsters are using phone centers, along with stolen customer credentials, such as SSN and DOB. Attendees also reported online fraud using stolen or hacked login information, as well as forged paper documents used to open new accounts and change personal information within existing accounts.

Data breaches are powering fraud

Retail banks are seeing victims of high-profile data breaches become victims of financial fraud. Conference attendees advised banks to take a multi-layered approach to fraud detection and prevention, using a series of ID verification and ID proofing technologies – as well as an internal “blacklist” of known frauds across DDA and credit accounts – to ensure they stymie more ATO fraud schemes before they can hit customer accounts.

Manual schemes that use social engineering are growing

A financial institution attendee reported an uptick in fraud from phone centers, focused on callers phishing for information about customer credentials. This company is revamping its customer service training to detect people phishing for information. These callers frequently have bits and pieces of customer identity they use to perpetrate the fraud, often acquired through data breaches. The company is also exploring solutions that identify IP addresses with high rates of fraud or past fraud losses as a way to better identify callers at the other end of the line.

Mobile and peer-to-peer payment fraud is an emerging concern

Attendees discussed the rising tide of mobile wallet and peer-to-peer payment fraud schemes, using Zelle, Apple Pay, Venmo and other payment systems to gain access to customer profiles that are tied to DDA or credit accounts. Investigators stressed the need for real-time fraud tools that would help detect more mobile payment fraud by screening email addresses, IP addresses and other digital “fingerprints” that may not currently be tracked by financial institutions.

While fraudsters have become more organized and are implementing technology to automate their schemes, we are encouraged that the industry is fighting back with technologies to thwart these nefarious efforts. Today, many banks are using a several data sources (including industry consortium data) – compiled and delivered quickly – in addition to their own data sets to catch fraud before it results in losses. Banks also need to be ready not just for today’s schemes and scams, but for a now-unknown set of future fraud risks. Therefore, banks and credit unions require solutions that will give them the power to add capabilities, integrate new data sources, and configure business rules—all to help ensure that the bank’s assets and customers are well-defended from fraud attempts.

Cutting-edge technology combines unprecedented search engine functionality and speed with heightened data security

Over the course of just a few hours in September, anti-fraud technology leader ID Insight was awarded a patent for its cloud-based encrypted search technology and honored for the technology as a finalist in Minnesota’s 2016 Tekne Awards. The patent and recognition are the culmination of years of innovation, collaboration and product development focus for ID Insight and positions the Minneapolis-based company for its next growth phase.

ID Insight’s search technology incorporates a Google-like search experience with government-grade security, a combination that has never before been available to companies. By combining a highly secure encryption package with the latest advancements in inverted indexing technologies, ID Insight now offers the same functionality as the world’s best-known search engines, while enabling companies to keep highly sensitive personal identifying data encrypted. ID Insight was awarded Patent No. 9,449,178 for Systems, Method and Computer Product for Fast and Secure Data Searching on Sept. 20. The company holds two additional patents.

According to ID Insight President Adam Elliott, this technology was developed in response to a customer’s need for an innovative solution that delivered both speed and security. A financial services company needed a “Google-like” search experience for accessing sensitive encrypted data. “Up until now, companies had to choose between speed and encryption when accessing sensitive data in the cloud,” Elliott says. “While there have been some attempts at enabling this capability, we were able to crack the nut on it through our patented approach of enabling new developments in inverted indexing technology.”

This technology is one of several recent cutting-edge product and platform innovations that have been developed in collaboration with current ID Insight customers and partners. “We are extremely proud that the Fortune 500 corporations we work with continue to demonstrate increased confidence in our relationship and our company’s ability to innovate and execute new ways to help them solve their largest business challenges,” Elliott says.

This technology is integrated into ID Insight’s fraud prevention SaaS platform. In August, the company announced enhancements to its platform to help a wide range of financial institutions reduce fraud losses and improve compliance processes. The expanded platform includes account profile information beyond address verification – such as phone, email and IP address verification – to help customers verify profile changes in an increasingly complex fraud environment. ID Insight customers use this technology every day for searching and reviewing high-risk activity and alerts all while securing the underlying sensitive personal data.

Hours before the patent was issued, the Minnesota High Tech Association named ID Insight a finalist in the 2016 Tekne Awards due to this break-through technology. This is ID Insight’s third nod as a finalist in the Tekne Awards, which celebrates leading-edge innovation and technological advancement in Minnesota; it was also named a finalist in 2009 and 2010. This year, ID Insight is a finalist for the Applied Analytics Award, which honors innovative applications for turning data-driven insights into improved business processes or outcomes. Winners will be announced on Nov. 16.

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About ID Insight

Established in 2003, ID Insight helps companies prevent fraud, reduce costs and capture more business by combining its massive collection of data on identities and profile changes with predictive scoring algorithms. ID Insight provides highly configurable verification, authentication, market research and fraud prevention solutions to financial services companies, credit issuers, retailers, online merchants and telecommunications companies.