How can organisations work together to better tackle consumer fraud
March 31, 2021
With estimates of 76% of fraud incidents leading to a financial loss for victims, yet only 2% resulting in prosecution, there is clearly a need for a more effective system. Fraud cases are complex and may not be prioritised in terms of police resources. But even with more resources, funding and tools, the fundamental issue of access to shared data remains. How can organisations tackle the complexity of consumer fraud effectively?
As legislation puts more onus on financial organisations to better protect customers, we have all seen more warnings and checks on our bank accounts to help stop bogus payments. And, like Sarah in our earlier blog, victims mostly turn to their financial institution for help first. But some incidents are not passed on to the police to investigate, and around 85% of incidents go unreported - leaving criminals free to try again.
The role of data in piecing together fraud means there are a host of additional organisations with a role to play. Telcos have location tracking or call usage patterns. Internet Service Providers (ISPs), web merchants, payment network providers, software companies and social media companies, search engines and advertising organisations also all have data that helps fill in the details about both behaviours and the flow of fraudulently claimed money. Together with industry bodies who can provide a level of data aggregation, a complete picture can be formed to support both financial organisations and the police.
In the case of fraud originating overseas there needs to be a way these cases can be analysed to help reduce the number of incidents in the UK. If fraud was included in international trade agreements information could be shared across borders by different countries.
How could it work?
All parties need to work together to support the mechanisms for reporting fraud but also to share relevant information. If organisations could automatically share data they’ve collected, through secure links such as Application Programme Interfaces (APIs) it would reduce pressure on individual organisations (e.g Action Fraud). This would mean the consumer only having to report an incident once, rather than to several entities, and that the information shared would be passed on to everyone to whom it was relevant.
It remains to be seen who could lead a shared data initiative, but perhaps an independent body with governance from all parties could be a solution. To help run this service the private sector could contribute financially to the public sector through secure access to specific police held data linked to their organisation, reducing the cost to the taxpayer. In turn, with access to a wider pool of data, retailers, banks and telcos could help reduce fraud for their customers, and lower their own call centre and complaint costs.
Without doubt consumers need a joined up approach. To do this a detailed plan supported by a technology strategy and roadmap are required. All the organisations we’ve highlighted have a role to play but to truly make a difference they need to work together to shape the right legislation, a shared data environment and to deploy the tools target criminals by reducing their access to data and bringing them to justice.