Fraudsters Are Not Getting Off Footloose Anymore
Posted by Karim Dharamshi on Thu, Feb 24, 2011
We hear it everyday and all the time: banks, credit card companies, insurance companies and others need to stay one step ahead of fraudsters. For example, in the United States, fraud costs banks tens of billions of dollars that customers must make up for in banking fees, etc. The good news is that there has been significant improvement in tools/techniques to catch fraudsters.
One new tool being used by banks and insurance companies in Canada has harnessed an old fashioned concept of social networking- the Six Degrees of Separation concept. It uses analytic software to discover links between the various identities used by fraudsters. Have you ever played The Six Degrees of 
Kevin Bacon? You name a Hollywood actor and have your friends connect them to a movie with actor Kevin Bacon in 6 links or less. That’s basically how the technique works.
Don’t worry! No one is out to catch Kevin Bacon. It’s fraudsters who need to worry because it will not be as easy for them to cover their tracks.
Here’s how it works: Jane Doe applies for credit under several different names, runs up the credit, and disappears. Software analysis can pick up links between Jane Doe’s various fake identities. It won’t be a Hollywood blockbuster, but it may be a workplace, an address, or a phone number. If the fraudster is not working alone and happens to be part of a larger organized group (as many are) the links will build a network which could expose the entire organization. Thus leading to a take down of not just one petty criminal, but an entire network. As Dan McKenzie, fraud solutions specialist at SAS Canada stated in the Globe and Mail “financial organizations are finding 20 to 50 times more fraudulent activity than they did without the tools”. Fraudsters be aware.
Thank you, Kevin Bacon.