By: John Lorimer, VP of Analytics and Product Management, LexisNexis Risk Solutions
According to the Identity Theft Resource Center (ITRC), as of August 11, there have been 472 data breaches, exposing 139,278,685 records in 2015 alone. It’s a safe bet that much of the personal identification information (PII) exposed in those breaches will be at some point used to perpetrate fraud. With all that PII out there, you might wonder what industry will likely fall victim to the fraud. The answer, according to the recently released results of the 2015 Fraud Mitigation Study is simple: criminals do not choose one industry over another when it comes to committing fraud. In fact, all industries are targets.
The study, commissioned by the LexisNexis Fraud Defense Network, examines cross-industry fraud trends of all types – including identity-based fraud – and surveyed 400 fraud mitigation professionals from the insurance, financial services, retail, government, health care and communications industries. Overwhelmingly respondents (84 percent) indicated that the fraud cases they investigated within their industry were also connected to another industry. And, the impact of cross-industry fraud is significant. Seventy-seven percent of respondents said cross-industry fraud cases had a moderate to extreme financial impact on their organization.
So, what can industries do to mitigate fraud? It’s often been said the best defense is a good offense and that’s what’s required. And, that begins with changing how they are fighting fraud. The siloed approach to each sector dealing with the problem on its own and relying only on data within its industry isn’t adequate. Instead, these criminals count on the fact that industries aren’t talking to each other. Once the fraudsters have pilfered one industry sector, they move onto the next unsuspecting industry. But, what if one industry sent up a flare to the others?
Imagine if data about fraud cases was shared across industries. The dynamic would shift. Through cross-sector collaboration, industry would have the upper hand. In this scenario, the fraudsters would be at a disadvantage. This is not just a pipe dream. Study respondents recognized they need more information to fight fraud; in fact, 74 percent acknowledged it would be valuable to have information on fraud cases from outside their industry.
Seventy-five percent of study respondents stated that they do rely on external data analytics-based solutions to detect and prevent fraud; the other 25 percent do not primarily because of a lack of budget, awareness, knowledge, comfort level or relevant training. The primary question is what’s the most effective way to share this information?
This is the mission of the Fraud Defense Network: to facilitate sharing of information, best practices and data around fraud mitigation across industry and government sectors. We have created the LexisNexis Contributory Risk Repository, a cross-industry database that houses information about fraudulent and suspicious events from organizations in finance, retail, insurance, health care, law enforcement and government. After the data is collected through the Risk Repository, LexisNexis applies advanced analytics to identify meaningful connections that not only illuminate past fraudulent behavior, but also help to flag suspicious patterns on future transactions.