New Tools to Foil First-Party Fraud
First-party fraud–accessing credit services with no intention of repayment–is a significant concern for credit unions and other financial institutions. And its prevention calls for a new strategy, according to Costa Mesa, Calif.-based credit reporting agency Experian.
A new white paper released by the company, “First-Party Fraud–Trends, Challenges and Outlook,” argues that institutions should expand their definition of first-party fraud and employ in-depth analytics of customer behavior at key process points to detect incidents, prevent losses, and in turn, reduce operational costs.
“If you’re an institution in a bust-out fraud case, your view is that someone opened an account, and for six months, their balance goes up,” Breitenfeld said. “That seems good, but we may see the same person doing that across 10 institutions, and that’s a concern. We alert institutions that may be in play in a bust-out scheme.”
Andrew Jaquith, chief technology officer for Connecticut-based information security vendor Perimeter E-Security, said he agrees first-party fraud is a significant concern and cited that it accounts for between one-third and one-half of financial fraud. He also advised a holistic prevention approach.