Identity Fraud Rings: A Circle of Distrust

Identity fraud occurs when a person intentionally uses false personally identifiable information (PII) such as names, addresses and Social Security Numbers (SSNs), to improperly obtain goods and services. While it can be carried out as an individual act, thieves often collude to perpetrate their crimes by forming a fraud ring.

An identity fraud ring is defined as a group of people actively collaborating to commit identity fraud. While some of these fraud rings are made up of what we might consider typical criminal “professionals,” many others consist of family members or groups of friends.

These groups may engage in a variety of fraudulent behaviors including forgery, filing false claims, identity theft, identity manipulation and counterfeiting checks or currencies, among others.

Working together, members of the fraud ring are able to make more money, better elude detection, aid one another with logistics, and carry out more diverse strategies for committing fraud.

An Inside Look at Identity Fraud Rings

Research conducted by ID Analytics’ ID:A Labs identified more than 10,000 identity fraud rings in the U.S. The study examined more than a billion applications for bankcards, wireless services and retail credit cards and found identity fraud rings attacking all three industries, with wireless carriers suffering from the most fraudulent activity.1

This is the first study to systematically find many thousands of these criminal groups, accomplished through the development of an algorithm that automates the process of examining the interconnections between identity fraudsters to uncover rings of organized activity.

Through automation we are able to look beyond individual behavior and take a broader approach to identifying fraud ring activity. By examining each group in detail, we see conspirators’ locations, ages and relationships. For example, ID:A Labs identified a family of five in Florida involved in a fraud ring for more than three years. The family, with ages ranging from 24 to 37, had filed at least 130 fraudulent applications, using more than eight SSNs and 11 DOBs during that time period.2

A Patented Approach to Disarm Identity Fraud Rings

ID Analytics’ patented approach to the systematic detection of fraud rings can help detect potential fraudulent activity. The patent covers a technique for the detection of rings of identity fraud by gathering a group of likely fraudsters and looking for interconnections. When these interconnections are strong, there are likely fraud rings.

Combining our ID Network insight and advanced data science enables ID Analytics to build new variables into our fraud models. The ability to recognize subtle patterns of fraudulent behavior and highlight them in our tools contributes to both the detection of bogus applications and provides enterprises with tools allowing them to tailor their remediation practices to reflect specific threat vectors.

1. Coggeshall, Stephen. (2012) I See Fraud Rings.

2. Ibid.