Patented Technology Uncovers Organized Fraud Rings

June 30, 2016

Patented Technology Uncovers Organized Fraud Rings ID Analytics said this week it has been granted a U.S. patent on technology that is able to identify fraud rings. While most fraud prevention efforts are aimed at assessing the risk of individual transactions, the San Diego-based provider of risk management and identity authentication technology said identifying organized groups of fraudsters working together will prevent future fraud and help law enforcement agencies investigating fraud. The patented technology works by identifying groups of likely fraudsters and looking for connections between them (e.g., sharing of physical address, phone number or email; the same Social Security number coming out of multiple addresses, etc.). The more connections the system finds, the more likely they are to be working together to perpetrate fraud.

From a law enforcement perspective, the system has uncovered some surprising results, Dr. Stephen Coggeshall, chief analytics and science officer for ID Analytics, told CardNotPresent.com. While individual instances of fraud tend to originate in urban or populated areas, fraud rings seem to be based in more rural areas. Perhaps, Coggeshall surmised, because they “are able to operate systematically with less detection” in these areas. He noted the southeastern U.S. as an example, with the technology identifying organized rings in the Carolinas, Georgia and Mississippi, although there are “hotspots” in metro areas like Atlanta and Detroit.

From a consumer and enterprise perspective, the technology also can make a difference. Being able to identify an individual as part of a fraud ring makes scoring discrete transactions for risk more accurate, according to Coggeshall.

“If you look at events in isolation, they are a little harder to flag as fraud,” he said. “But, when you look at them in a more holistic way, it does substantially help our fraud detection tool on an individual event basis.”