Insurance Nexus recently sat down with Vodafone’s Manager of Fraud, Andrew Spencer, to learn about how mobile network operators (MNOs) are fighting fraud. With fraud being a key challenge facing insurance companies, we chatted to Andrew to get the scoop on fraud trends, solutions and how to beat a fraudster.
Insurance Nexus: What types of fraud are you focusing on in the fight against crime?
Andrew Spencer, Vodafone: “The biggest focus is identity fraud that leads to subscription fraud, where a stolen identity is used to set up an account. That can either be a brand new customer or it could be an existing customer, so the fraudster is able to use credit details and bypass security to process upgrades and get handsets.
There are two different types of fraudsters - those who are trying to get handsets; and people who are trying to get Sim cards to ring premium numbers. These do tend to be in two different people. The credit vetting department is linked to industry wide hotlists to find addresses that are linked.
The other things we can do are around internal processes, so fraudsters are typically quite lazy and place several orders, but if they’re asked to put an email address they will use the same account. While they go to the hassle of setting up accounts, they build up lists with one email that’s been used 20 times. Even if the account might look legit these few factors are flagged.”
Insurance Nexus: What fraud types are receiving less attention? Does this mean this fraud type isn’t being committed and is the right detection system in place to pick it up?
Spencer: “There are some instances that the fraud will just go down as bad debt - we are aware that the fraudster has had us. We could probably do more to stop that sort of thing.
We have in the past had 1st party fraud, when someone applies for an account, gets it and 3 months later, or 2 years later, say that “this contract has nothing to do with me, I want it closed down and charges refunded.” It’s surprising how many think they can ring up and say this has nothing to do with me. We’ll do a standard process check and we can see that the handset is used in the location of your home address, and that you’ve texted someone you know that is on your old account.
Our priorities are based on the value of the fraud. For example, an iPhone going out the door is valuable, but the big money is in getting a Sim card and ringing international numbers. You can rack up £100k to £200k in a day, and you can do that with 2 or 3 Sim cards.
There is a challenge with working within international regulations to identify and chase fraud. In the UK it is easier, as BT will support us in catching the fraudsters. But in Europe it can take a lot longer to investigate. Getting the authorities and networks involved to track that money and a police force willing to get involved would make a difference.
We’ll definitely get a lot better, but my worry is fraudsters will find another method. There has been a lot of hype around the use of IP addresses and fingerprints, but we are still seeing some of the same levels of fraud.
If you were to ask every MNO if they would change to mandatory photo identification at the point of sale, they would all say yes - but only if everyone else does it too. With more and more people walking around with photo ID, we will get to a time where it’s normal for everyone to have a photo ID, and then it will be much easier to switch to requiring it for a contract.”
Insurance Nexus: What technology and support services are out there to help detect and prevent fraud, and is this enough to significantly minimise the risk of fraudulent activity?
Spencer: “There is something to be said for the value of in-house systems. All of our systems are in-house and I might be biased, but I really believe that if you have an in house system then you can respond to a new trend more quickly.
When you have a big technology provider, they’re all really good systems, but they tend to be slow to make changes which slows down your response time. When you have an in-house system with an on-site team and you don’t need budget approvals for updates, you are able to respond that bit quicker.
If you want to make a change you can just do it, and whilst it might not work and you could lose some money before you change it, you would still be writing a PO for an off the shelf product.”
Andrew was speaking at the Insurance Analytics Europe conference being held on the 5-6 October 2015 in London. Appearing alongside speakers from eBay and Telegraph Media, this out-of-industry panel discussion will provide analytics lessons for the insurance industry.
This two-day event explored how analytics is being used to improve risk management, increase efficiency, fight fraud and win and retain customers. Featuring speakers from Europe’s largest insurers including AIG, Aviva, AXA and more, this event is an opportunity to learn how to maximise your analytics capability.