Experian, the global information services company, has published its first annual global business report covering the convergence of growth strategies and fraud prevention. Entitled: ‘Global Business Trends: Protecting Growth Ambitions Against Rising Fraud Threats’, the document is designed as a guide for senior executives and fraud prevention professionals, offering new insights on how the alignment of strategies for business growth and fraud prevention can help today’s organisations grow their revenues while at the same time effectively managing the risks posed in what’s now an increasingly virtual world.
The report identifies five major trends that businesses should note and act upon in order to mitigate fraud and improve the customer experience in today’s fast-paced, consumer-centric environment. These are as follows:
*Applying right-sized fraud solutions to reduce unnecessary customer disruption
It’s time to move on from a one-size-fits-all approach that creates more customer friction than is necessary. Instead, companies should apply fraud solutions that reflect the value and level of confidence needed for each transaction. This means ‘right-sizing’ fraud solutions such that they align with true fraud rates and commercial strategy
*Knowing the universal consumer is the core of modern fraud mitigation and marketing
Achieving a universal profile of consumer behaviour beyond the traditional 360-degree view requires access to a combination of identity data, device intelligence, online behaviour, biometrics, historical transactions and more for consumer interactions not only with the host company, but also across other businesses and industries. Companies that translate this knowledge and use it to identify consumers can distinguish a fraudster from a real customer more easily, subsequently building trust along the way
*Expanding your view through a blended ecosystem
In addition to using their own first-party data sources, companies need to participate in a blended ecosystem, working across businesses and even industries. Fraudsters now have access to more data than ever before, including that which is traditionally employed to verify identities, and they use that data to create an entire digital profile. Therefore, you can no longer reach the digital interaction data you need by managing the process in a ‘siloed’ manner. Achieving an expansive view of the universal consumer requires multiple data sources working together
*Achieving agility and scale using service-based models
Today, more and more companies are choosing subscription-based systems rather than building in-house or implementing bespoke on-premise solutions. Continuous upgrades and access to new risk logic that comes with subscription models provides more agility and faster response to emerging threats, no matter how fast the volume grows or what products, channels or geographies are pursued
*Future-proofing fraud solution choices
Companies need access to a wide variety of traditional and emerging technologies and information sources to fill in knowledge gaps and ‘blind spots’ where the fraudsters try to hide. The ability to modify strategies quickly and catch fraud faster while improving the customer experience is a critical aspect of fraud prevention moving forward
Bringing together these key trends, the report provides business leaders with the insight they need to fight fraud using the same client-focused approach currently being employed to attract new customers and grow revenue.
Cost of doing business
“There’s a persistent mindset that fraud loss is just the cost of doing business,” said Steve Platt, global EVP of fraud and identity at Experian, “but as fraudsters evolve, those losses are climbing and the status quo is no longer effective or acceptable. We all need to be as forward-looking in fighting fraud as we are in business operations and marketing. To this end, a real understanding of consumers is absolutely critical for success. Essentially, we’re talking about the convergence of business growth and fraud prevention.”
The full report from Experian can be downloaded here. The report also features an interactive Fraud Prevention Benchmark tool that companies can use to explore how these trends impact their business, and how the performance of their approach measures up against industry practices.
The report is relevant to functions spanning the enterprise, including C-Suite executives such as chief marketing officers, chief risk officers and chief data officers. The content focuses on business processes where fraud infiltrates, including new account opening, account access, money movement transactions and emerging trends for combating fraud (such as advanced fraud analytics). In each area, the report details how multiple business functions can apply responses to create business growth.
In conclusion, Platt added: “We hear from our clients that they’re most successful when CMOs along with CDOs and CROs all work together to understand the customer and develop fraud management solutions that create a better overall experience.”
For its part, Experian was recently cited in Forrester’s 2016 ‘Vendor Landscape: Mobile Fraud Management Solutions’ report and listed as having nine out of a possible ten capabilities needed to combat mobile fraud.
Local authority fraud defences save £271 million
In 2015-2016, an estimated 77,000 fraud cases worth £271 million were detected or prevented by local authorities. That’s according to new figures just released by the Chartered Institute of Public Finance and Accountancy (CIPFA).
The CIPFA Counter Fraud Centre Fraud and Corruption Tracker suggests that many authorities have recruited more counter fraud specialists to tackle complex high value offences such as the illegal sub-letting of council houses. Housing scams in 2015-2016 amounted to the highest value fraud type with 3,842 episodes totalling £148.4 million. Council tax fraud, such as falsely claiming the single occupancy discount, was the most common fraud type with 47,747 cases detected having a total value of £22.4 million.
The average value of each fraud detected in 2015-2016 was £3,500 compared to £2,500 in 2014-2015. This suggests local authorities are taking more strategic approaches towards tackling the more complex and higher value cases.
Rachael Tiffen, head of CIPFA’s Counter Fraud Centre, said: “Fraudsters beware. Local authorities are becoming smarter and more effective. This is saving taxpayers’ money and helping to get council houses, disabled parking badges and other vital services to the people who really need them. However, more needs to be done. At least 10% of authorities still don’t have a dedicated counter fraud team, while there remain many barriers to data sharing that could help expose fraudsters. We recommend that local authorities work together to pool resources and information. The first step will be to agree on a common approach towards recording and measuring fraud.”
The report highlights a number of emerging risks. The number of fraud cases involving Right to Buy increased from 526 in 2014-2015 to 870 in 2015-2016. This risk is only set to increase as the scheme is rolled out to housing associations in the coming year.
Procurement fraud, such as overcharging and falsely billing for goods and services, was also highlighted as a growing threat. The number of reported cases has witnessed a dramatic increase from 114 reported instances in 2014-2015 to 623 cases during 2015-2016.
Basis of the survey
The CIPFA Fraud and Corruption Tracker is based on survey responses from 211 local authorities, including councils, Police and Crime Commissioners, transport authorities, Fire and Rescue authorities, waste authorities and public agencies. Survey data has been used to generate estimates of fraud nationally. The tracker is designed to help local authorities identify fraud risks and improve detection rates, and is actively supported by the National Audit Office, the National Crime Agency and the Local Government Association.
The CIPFA Counter Fraud Centre was launched in 2014 to lead and co-ordinate the fight against fraud and corruption across local and central Government, as well as the health, education and charity sectors. Working in partnership with the City of London Police, the Department for Communities and Local Government, the National Crime Agency, the Cabinet Office, NHS Protect, the National Audit Office and myriad other agencies, the Counter Fraud Centre offers bespoke training and services to help organisations detect, prevent and recover fraud losses.