Industry Thoughts

How to effectively fight increasing fraud attempts (advice from experts)

Inscribe Fraud Analyst Daragh McMeel
May 18, 2022

As someone who has worked in numerous roles within the banking industry that dealt with fraud, I can say for certain that we are seeing more data-sharing among fraudsters than ever before.

There’s been a sharp rise in social media platforms that enable fraudsters to easily share fraudulent and fake documents with other individuals or even across organizations — meaning that the fraud prevention playbook needs to change. 

Risk and operations teams know this. They’re no longer able to rely on solely manual reviews for onboarding and underwriting customers.

But what can they do to adapt? 

Rapid Finance Director of Operations Patrick Lord and BHG Fraud Analyst Michael Coomer recently joined our webinar, “ How to Prepare for a New Generation of Financial Crimes,” to answer just that.  

Here are some insights they shared into how forward-thinking teams are evolving to mitigate risk and approve more customers in this changing environment. 

3 ways to defend against increasing fraud attempts 

1. Foster a culture of fraud prevention

Every company should be talking openly with their staff about fraud, Patrick explained. And not just within the fraud or underwriting department, but throughout the entire organization.

Patrick added: “You have to create the right culture to talk about it openly and not be embarrassed to talk about it. It's happening, right? If it's doing a post-mortem on a deal that went bad and you discover it's fraud: talk about it, learn from it, do that session where there's no blame and the focus is trying to get better.”

In addition to post-mortems, Patrick suggested companies can encourage their teams to speak openly about fraud by having a dedicated place for them to talk about it. 

“One of the things we've done here at Rapid Finance is create a public #suspected_fraud channel in Slack, where any member of the slack workspace can go to say, ‘Hey, something looks fishy on this file, right?’ So it encourages people to not only go there and speak up when they have a concern about a deal or an applicant, but it also becomes a central place where people can go to if they want to learn a little bit more about what's going on in the organization. It's right there for them to go search and learn, as well as pick the minds of some of the more senior team members who are adept at looking at suspicious applications."

2. Introduce coordinated friction  

The increasing fraud attempts over the past few years has created the need to move away from frictionless processes and more toward coordinated friction, Michael explained. Yes, companies need to have efficient processes; but they also have to apply friction and skepticism in the appropriate circumstances. Balancing the two creates coordinated friction. 

For example, Michael’s team adds more efficiency to their process with fraud detection and automation solutions so that when they do need to take a second look at something, they don’t have to worry about slowing down their application processing times. 

Inscribe improves the ability of an investigator like myself to efficiently review something that otherwise may take me up to an hour of time,” Michael said. “Being able to instantaneously get a highlight of fraud indicators from the metadata that normally I have to manually review on each individual page and each individual data point on a document — it’s a huge uplift.”

In addition to speeding up the document processing time, Michael added, tools like Inscribe make it easier to onboard new investigators and operations specialists by decreasing the length of time that it takes to become familiarized with documents and recognize those indicators of manipulation. Eradicating that upskilling time (which can take people anywhere from 3-6 months) is another way that Michael’s team maintains efficiency in their process. 

Patrick added that Inscribe also helps with coordinated friction by not only determining whether or not documents are fraudulent, but which documents should be reviewed by his internal team. 

“You figure out ways where you can automate and streamline things,” Patrick added. “As well as where you need to pay attention to red flags and not only determine whether this an application I need to look at more in-depth, but where should I look at first? And where should I target so that I can maximize my efforts?”

3. Empower employees with layered technology 

Technology, alone, is not the answer. There’s no silver bullet in fraud detection; no single tool can detect every type of fraud. So giving your team members tools that allow them to layer fraud detection throughout their processes and various customer touchpoints is critical to their success. 

"We need to have a multi-layered approach. And it's a combination of both the technology side 

as well as the human capital and the human intelligence,” Michael said. “A tool like Inscribe is hugely important because, regardless of the attack vector or the type of fraud that we're seeing — document manipulation, forgeries — documents are the consistent thread, through-line across all different attack vectors.” 

Michael added that the ability to track templates and other similarities in document manipulation across multiple applications allows his team to identify coordinated attacks, which he said is hugely important when it comes to tracking and mitigating fraud on a larger scale. But the key is using multiple fraud detection tools. 

“Make sure that you have backup tools: the bank verification programs where you can get third-party, read-only access info for tax documents. Services like Tax Guard, where you could go through and validate tax return information and make sure you have things in place. If you question a business’s existence, there are companies like Truepic, where customers … can do traditional site inspections right from their own phone.” 

The important thing is that there are backup options for when red flags come up, Patrick said, so that your team members are able to focus on the important reviews but still be efficient in their jobs and move on to the next file quickly. 

From fraud detection to revenue protection

When asked by an audience member how much he would spend on fraud detection, Michael said that it’s not a question of “How much are you willing to spend?” — but rather a question of “How much are you willing to lose?” 

“There almost needs to be a rebrand of the word ‘fraud,’” Patrick added. “I'm to the point where it really needs to be looked at as ‘revenue protection,’ right? How do we get out the deals and the loans that you shouldn't be funding so that you can more efficiently focus on and get funding out for the deals that you should be doing?” 

As fraudsters continue to evolve, companies will need more champions of revenue protection than ever. Check out the full on-demand webinar to hear more from Michael and Patrick. Or reach out to speak with a member of our team if you’re ready to supercharge your risk team with fraud detection and automation.

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