Mitigating fraud during a crisis - Sip and Solve

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Information about Mitigating fraud during a crisis - Sip and Solve

Published on October 17, 2020

Author: ExperianBIS


1. 1 © Experian 16/06/2020 Sip and Solve Mitigating fraud during a crisis Featuring: Li Mao Sr. Product Manager, Fraud Experian Business Information Services

2. 2 © Experian COVID-19: Macro Trends L A T E S T N E W S Economic Trends • Stock market declines • Significant impact to small business • Unemployment claims at record levels Credit Trends • Originations/ inquiries down • Utilization likely to increase • Debt-to-Income increasing • Delinquencies rise Regulatory Response • CARES Act for small business relief and payments to individuals • Deferred Tax Filing date Fraud • Increased digital volume invites additional fraud • Phishing scams increasing • Synthetic ID and first party fraud on the rise

3. 3 © Experian More than one in three businesses have been victimized

4. 4 © Experian Perfect storm is brewing Consumers expect payment forgiveness programs Government relief programs Responsive compliance mandates/changes Increased phishing scams Loss of consumer income and discretionary funds Increased digital banking and online shopping Volatile market conditions in consumer behavior, expectation, and value/risk Small business temporary shutdown Low interest rates

5. 5 © Experian Types of application fraud expected to increase – Thief has no intent to pay – Early Delinquency – High Utilization – Bustout Misuse of Credit (1st Party)Identity Theft (3rd Party)Synthetic ID – Thief impersonates a true consumer and/or business – Stolen PII and publicly available data – Thief combines data from multiple sources or creates a fake ID – Some manipulate identity to get away from poor credit history 60% of financial institutions report first-party fraud as the biggest source of fraud losses

6. 6 © Experian Segmentation and prioritization strategy Benefits: • Reduce costs: Focus manual resources on the highest fraud risks • Improve customer service: Expedite your ability to address your customers who are truly in need of relief • Proactive vs reactive strategy: Fraud prevention after the fact will impact your bottom line • Prioritization and activity determined by multiple factors: ― Days past due ― Utilization of remaining balance ― Type of relief requested by customer ― Outstanding $ balance ― Experian BizID / Precise ID / Clarity model suites (SID, 1st party) • Ability to help and target businesses in true need of your support High Low Score Credit utilization Mail / email to offer support options Email / phone to offer support options Critical to establish contact by phone Introduce friction to re-establish authentication

7. 7 © Experian Checklist of risky behaviors to consider solving for  New device logins and other account take over behaviors  New phone numbers not previously associated to the account  Difference in ship-to address and business address  Balance transfers, wires, and other high-risk or atypical account behavior  Folding existing business to remove debt and open the same business with a new name  Using email addresses that differ slightly from the real email address  (Ex. vs  No prior website traffic  Manipulation of financial and tax statements

8. 8 © Experian Alternative Data Synthetic Fraud Risk Level Indicator Document Verification FraudNet BizID Behavioral and Biometrics Unsupervised Machine Learning CrossCore Data, Attributes, and Scores • Precise ID Model Suite • Clarity Fraud Risk Score Consulting • Experian Advisory Services • Analytic Consulting ◼ Immediate (<4 month) ◼ Strategic (>4 months) Challenges / Needs • Fraudsters abound • Increased privacy and data and cyber security • Synthetic identity and bust-out detection • Digital migration • Enhanced digital identity verification • Account takeover • Risk-based authentication Be Aware Plan for expected spike in fraud schemes and attacks as digital engagement increases Anticipate First Party Fraud Prepare for increase in account activity utilization and requests for line increases Segment Identity Theft and Synthetic Identity Prepare for increase in application volumes Consumer Behavior Changes Manage digital migration and consumer expectations Summary and key takeaways

9. 9 © Experian 16/06/2020 Thank you! Have questions or want to learn more about mitigating fraud during a crisis? > Send us a message in the “Chat” function or via Tell us what you thought of today’s session. > Point your camera at the QR code and take the 1 minute survey

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