Latest trends in serious and organised identity fraud

1. Latest trends in serious and organised identity fraud Gareth Jones Fraud Products Director - Experian Ltd gareth.jones@uk.experian.com 0115 992 2101

2. Latest trends in serious and organised identity fraud • The methodology used by the fraudsters with reference to case examples • The impact of the fraud in terms of value of loss and spread of victims • Good practice in the management of mass-multiple fraud cases of this sort • Gaps in the fraud detection process that could be improved upon • Opportunities for fraud prevention • Taking care of the victim

3. Latest trends in serious and organised identity fraud • The methodology used by the fraudsters with reference to case examples • The impact of the fraud in terms of value of loss and spread of victims • Good practice in the management of mass-multiple fraud cases of this sort • Gaps in the fraud detection process that could be improved upon • Opportunities for fraud prevention • Taking care of the victim

4. Personal identity fraud • Impersonation • Current address • Previous address • Deceased • False identity • False identity fraud • Account take-over • Transaction fraud

5. Examples Three short case studies 1. Fraudulent placement of data • See Credit Today crime supplement article 2. Fraudulent acquisition of data • Direct to Consumer 3. Fraudulent acquisition of data • Recent NHTCU success story • We supported the prosecution of these fraudsters - pleaded guilty, total 15.5 years imprisonment

6. Case Study - empty house fraud • West African fraud ring • Minimum of eight involved • 6 men 2 women • IT literate - 4 had degrees, 3 of those IT degrees • Persistent offenders - on bail for other frauds • London area • Access to good forgers • Formed companies to launder proceeds • Properly formed, CCL, IC registered, Accommodation addresses • Business premises to operate front company

7. Case Study - empty house fraud • Identification of addresses - mailing lists for empty properties • Identify previous occupant - Electoral Register - no adverse - no access to premises • Forged proofs of identity / address • Strategy for collecting mail - re-direction to forwarding address, use of accommodation address • Broaden identity - employment / bank / telephone details • Face to face application for banking facility - inexact impersonation • Broaden relationship and fully utilise all facilities • Dispose of incriminating evidence

8. Latest trends in serious and organised identity fraud • The methodology used by the fraudsters with reference to case examples • The impact of the fraud in terms of value of loss and spread of victims • Good practice in the management of mass-multiple fraud cases of this sort • Gaps in the fraud detection process that could be improved upon • Opportunities for fraud prevention • Taking care of the victim

9. Quantity and cost of identity fraud - nationally • UK assessment of ID fraud • Part of Government Entitlement Card White Paper • Full exploration of identity fraud issues, costs and views of disparate market sectors

11. Total £680m

12. What you won’t hear! • Significant percentage of identity fraud is prevented • CIFAS statistics: • 2002 - 75% • 2003 - 90% • Deceased impersonation: • 2001 - 5,000 • 2002 - 9,000 • 2003 - estimate 16,000

13. Identifying likely victims:Bin raiding research • Anecdotal evidence of activity in Nottingham area • National survey of local authorities revealed significant majority received complaints • Initiated arm’s-length research (MEL) with involvement of Police and Nottingham City Council

14. Our sample • 1 week’s waste from 5 different areas using MOSAIC socio-economic profiling • A: High income (94) • C: Blue collar owners (75) • D: Low rise council (65) • F: Victorian low status (89) • H: Stylish singles (91) • Waste from each sample household collected separately

15. Sorting and analysis • Each bag opened separately • Documents filtered • No personal data was recorded • Type and condition of each document listed • All filtered documents destroyed as confidential waste

16. Headline results • Rubbish bags contained • no relevant material 14% • full name and address 72% • telephone number 6% • date of birth 2% • card number 20%: of those with expiry date 80% • signatures 13% • bank account information 27% • utility bills 16% • official letters 25%

17. Summary of findings • Stylish singles at greatest risk • throw away more sensitive information; more people per household • Full name and address easy to find • no one group at greater risk • Rare attempts made to destroy material (8% attempted - mostly unsuccessful) • attempts usually limited to card numbers • Card number and bank account information common • easy to combine material to put together a picture of a person’s life

18. Communicate findings: PR objective • Intention of research was • to provide evidence of need for action • to formulate a nation-wide fraud prevention message • to work initially with BBC Hard Cash and then other media to broadcast message

19. Latest trends in serious and organised identity fraud • The methodology used by the fraudsters with reference to case examples • The impact of the fraud in terms of value of loss and spread of victims • Good practice in the management of mass-multiple fraud cases of this sort • Gaps in the fraud detection process that could be improved upon • Opportunities for fraud prevention • Taking care of the victim

20. Good practice • Have a fraud strategy • Review and follow plan • Identify point of failure and address it • Look for other unrelated cases • Adopt an ethical approach - involve the Police • Identify the victims - consumers and business • Dry run consumer literature • Match resources to levels of outward communication • Have a PR plan, scripts, statements

21. Latest trends in serious and organised identity fraud • The methodology used by the fraudsters with reference to case examples • The impact of the fraud in terms of value of loss and spread of victims • Good practice in the management of mass-multiple fraud cases of this sort • Gaps in the fraud detection process that could be improved upon • Opportunities for fraud prevention • Taking care of the victim

22. Gaps in fraud prevention process / Prevention opportunities • Victims suddenly credit active • Miss-match date of birth to actual age • Miss-match date of birth to ‘stage’ of forename • Not confirmed BT at current address • Re-direction on at current • Forgeries - same serial numbers • Deceased file matches • Employment - new business, accommodation address

23. Other inferences within an application • Applicant profile - do they fit the product? • Amount of facility - highest possible amount • Day? Time? - just before closing • Duplicates - at address level • Early extension - new products sold • E-mail - free ISP - can check IP to area

24. Prevention - relevance of new channels • Online / Batch / Retrospective reporting • Internet channel opened up online fraud prevention services to SME’s • Made business more competitive, requirement to improve SLA’s • Impact - trade off between advances in fraud prevention and expectations of improvements in the business process • Risk is that natural tension between these competing parts of a business can lead to ‘accidents’

25. No Business Tension between prevention and production Parity Zone High Risk Business Low Risk Business Fraud Prevention BAD Business New Business ‘Production’

26. No Business Trading off added prevention for increased production Un-rocked Boat Fraud Prevention BAD Business New Business ‘Production’

27. Credit Accounts Name Address Date of birth Product Performance Extended Credit Applications Name Address Date of birth Biographical data Fraud Data Matching Exact / Fuzzy New Application Name Address Date of birth Telephone Previous address Bank Sort / Acct No. Etc Miss - Match Credit Applications Name Address Date of birth Product Performance Public data ER CCJ’s Bankruptcies IVA’s Notice of Correction Validity Match Other data CIFAS Suspects GAIN Deceased Redirections Sanctions Etc Existing Accounts Name Address Date of birth Telephone Bank Sort /Acct No Etc Velocity Match Exclude Match Results Evaluated Decisioning - Scorecard Client side / Bureau side Referral policy

28. Fraud matching Online Batch Detecting Existing Frauds CIFAS CIFAS /National Hunter / Hunter Local / Corporate Hunter Exception / Caution Files Detecting Existing Suspects Detect Data sources Fraud Scorecards National Hunter / Local Hunter Preventing new Frauds CIFAS trawl reports National Hunter Detecting frauds in clean accounts

30. Latest trends in serious and organised identity fraud • The methodology used by the fraudsters with reference to case examples • The impact of the fraud in terms of value of loss and spread of victims • Good practice in the management of mass-multiple fraud cases of this sort • Gaps in the fraud detection process that could be improved upon • Opportunities for fraud prevention • Taking care of the victim

31. Why? • Maintain consumer confidence • Operational costs of administering case are greater in reaction to a substantive fraud, than if prevented • Human resource costs • Data clean up • Liaison with victim • Case handling • Court case - preparation of statement • Reputational damage • Poor PR • Impact of not being trusted

32. Victims of fraud • Dedicated Experian team established Summer 03 • 300-400 hours to clean up the mess • £5k-8k costs • 400 cases recorded since September 03 • Previous address fraud – 20 months to discover • Average fraud £1400 per case • Experian leading NCOA initiative

33. Prevention - self help - consumers • Obtain a regular copy of your credit file • Statutory nominal fee £2 • Monthly repeat copy - reduced price • New online channel - WiseConsumer and CreditExpert • Dedicated Victims of Fraud service - to assist victims affected by fraudsters using their name

34. Victim - relevance of data • Transparent - every individual has a right to see data about themselves • Legal requirement for accuracy, relevance etc. • Accessible - easy to retrieve and report upon • Immediate - usually very quick to deliver • Delivers knowledge - allows the individual to assess their status • Therefore data can help an individual protect themselves from the impact of ID fraud • Know if someone is looking at their data • Take immediate steps to reduce damage

35. Victim - relevance of online channel - example • Traditional - WiseConsumer • New - CreditExpert • Allows individuals to access their credit report online • Ongoing file monitoring and alerts • Mix of systems and physical KYC procedures prevent fraud • Immediate and without delay

36. CreditExpert launched 13 September

37. CreditExpert - Member centre

38. CreditExpert - File alerts

39. Latest trends in serious and organised identity fraudThank you!Any questions? Gareth Jones Fraud Products Director - Experian Ltd gareth.jones@uk.experian.com 0115 992 2101