News Releases
ID Analytics and Thirteen Consumer Industry Leaders Join Together to Prevent Identity Theft and Related Fraud
Breakthrough Pattern Recognition Technology Arms Businesses with Tools to Protect Themselves and Consumers
SAN DIEGO, CA, May 14, 2003–ID Analytics, Inc., a new company providing advanced technology to help businesses reduce loss due to identity theft and related fraud, today announced its new solution, the ID Score™, for consumer companies across multiple industries. With a charter to detect and prevent identity fraud at the point of application, ID Analytics is working with some of the nation's largest card issuers, retail banks, retailers, wireless carriers and online merchants.
The ID Score is a pattern recognition technology solution that helps businesses reduce losses associated with identity theft by as much as 40 percent, incremental to current fraud detection efforts. By using the ID Score at the point of application, companies can identify potentially fraudulent applications in real-time, allowing them to better manage their risk and to protect their valued consumers.
Unprecedented Multi-Industry Collaboration
Over the past year, ID Analytics has worked with thirteen leading consumer companies in the nation's first-ever cross-industry identity theft research. The research involved analyzing the identity information from hundreds of millions of credit, debit and wireless phone applications as well as confirmed and suspicious fraud account records. Through this research, ID Analytics found that identity theft schemes are highly complex, evolve continually, and routinely cut across the wireless, credit card, banking and online markets. More than 70 different variables - most of which are only visible with significant cross-industry cooperation - have proven useful in detecting identity fraud before it occurs.
The most significant finding from the research is that the magnitude of identity fraud losses is enormous, surpassing current industry estimates. While there was variation by industry and channel, losses were found to be as high as $100 per approved account. Even using currently available solutions, consumer businesses have difficulty recognizing when identity fraud has occurred because the "fraudster" who has been granted credit simply disappears, having never made any payments on the account in question.
According to market research firm Financial Insights, annual fraud losses to financial institutions will likely reach $4.2 billion in 2003. "It's imperative that fraud related to identity theft is appropriately mitigated," said Dennis Behrman, retail financial analyst for Financial Insights. "Without adequate attention and due diligence, identity theft will continue to spiral upwards, becoming so costly that the only valid mitigation of the risk will involve withholding certain customer-demanded services, or passing on losses to consumers in the form of higher fees. Either of these scenarios would have an incredibly damaging effect to customer relationships." Behrman added that if identity theft continues to grow at last year's rate, every single US bank, on average, will lose $3 million to identity theft-related fraud between now and 2006.
Breakthrough Fraud Detection Technology
Underlying the ID Score is a pioneering pattern recognition technology called Graph Theoretic Anomaly Detection® (GTAD™), which has a patent pending. ID Analytics scientists have applied their expertise in advanced machine learning techniques to develop GTAD, which dynamically detects unusual patterns based on the identity data elements included on an application, such as name, address, phone and social security number. The resulting graphic patterns are then identified as high probability frauds or likely legitimate applications. Next, the fraudulent anomalies identified by GTAD are used to create analytic scores that assess the risk of identity theft. Working with this unique and unprecedented set of information, ID Analytics has been able to gain insight into hundreds of fraudulent behavioral identity patterns and suspicious identity relationships that have not been identified with current fraud detection methods.
"By working with our network of customers and analyzing their information, we've spent the last year building identity fraud detection models that allow us to understand and score fraudulent behavior patterns," said Allen Jost, PhD, chief technology officer for ID Analytics. "With the GTAD technology, we can conduct this dynamic pattern analysis in fractions of a second." Unlike other fraud detection products with high false-positive ratios that ultimately require tedious manual data verification and lack the ability to identify new fraud patterns, GTAD enables the instant delivery of a score at the point of application with low false-positive rates, and high detection rates. This timely delivery of the ID Score, combined with the cross-industry data, enables lenders to stop applications early in the fraud cycle.
"As a result of this cross-industry effort and our work with the law enforcement community, we've gained astounding insights into the behavior of identity thieves, recognizing incredibly consistent patterns of activity across the board," said ID Analytics CEO Hansen. "For instance, the typical identity thief initiates the crime by defrauding a mobile phone provider, and moves from there to establishing any number of fraudulent accounts with credit card companies, retailers, and so on. Ultimately, an accomplished 'fraudster' can bring in hundreds of thousands of dollars in 12 to 18 months' time. Until now, these behavioral patterns have gone undetected."
According to Linda Foley, executive director of the Identity Theft Resource Center, it's timely and appropriate for credit-granting businesses to shoulder the epidemic problem of identity theft. "Consumers are not, and cannot be, the first line of defense," said Foley. "Typically, identity theft doesn't start with an action taken by a consumer. In most cases, the root is in the business community and that's where the next battle must be fought. When identity theft strikes, a victim is left with a ruined credit history and the time-consuming and complicated task of regaining financial health. ID Analytics and the ID Score are finally a step in the right direction. The measures they're taking will not only reduce business losses due to this crime, but will also better protect their consumers."
About ID Analytics, Inc.
ID Analytics, the leader in Identity Risk Management, provides unprecedented real-time visibility into the risk of individuals, protecting both organizations and consumers. ID Analytics pioneered identity scoring technology and uses Advanced AnalyticsSM and the ID Network®, the nation's only real-time, cross-industry compilation of identity information, to assess risk and improve the customer experience across all consumer touchpoints. Top U.S. communication and financial service companies, as well as major retailers, government agencies and healthcare insurers, all trust ID Analytics to drive new revenue opportunities, eliminate financial losses, and protect their brand reputation with less customer friction.
ID Analytics is a registered trademark of ID Analytics, Inc. All other trademarks and registered trademarks are the property of their respective holders.