Application fraud manifests in different ways but the overarching principle that applies to Application fraud is those customers who come in with an intent to defraud the organization – i.e. applying for products or services for which they have no intent to pay. This is a serious problem and the fraud losses – mostly categorized as bad debt – can run into millions of dollars a year. A closer look can reveal customers who genuinely can’t pay and those who won’t pay but clubbed into one. As the “can’t pay” versus “won’t pay” distinction is getting ever harder to distinguish, customers who “won’t pay” tend to slip through the net far too easily, and far too often.
Application Fraud or First Party Fraud as it’s sometimes referred to in popular literature, is only predicted to increase with the advent of new controls that make it difficult for fraudsters to perpetrate traditional fraud. Chip and Pin credit cards are a case in point – what else would a fraudster think of when it’s no more profitable to clone a card that has a chip and pin technology. The easiest option is to commit application or subscription fraud.
Application fraud is pulled off in many ways – using own identity but with subtle changes in personal details to circumvent normal risk rating rules; creating fake, synthetic or multiple identities that pass off as genuine; stealing identities to obtain new products or services etc. While stringent checks are enforced these days by service providers to avert losses, fraudsters tend to remain a step ahead, constantly testing and getting through the thresholds set by the service providers.
Tackling Application Fraud manually had some effect in loss prevention. However, this has lost steam as the sheer number of applications – often via new channels – has strained the manual process. Quite often even the legitimate customers are put through a long wait before services are approved. Speed of decision at the point of application is the new normal and afraid no manual process can match sophisticated technology to detect high risk customers instantly.
This brings us nicely to how we can help tackle this menacing facet of fraud.
Our ATREUS Application Fraud Management tool has a sophisticated search and decision engine that can provide instant accept, reject or refer decision. The tool also provides batch capabilities to vet all new connections to ensure no fraudsters accidentally slip through the net and it provides capabilities to filter out fraudulent customers from ever receiving new promotional offers. Atreus now comes with an API for easy integration with store systems and online systems.
With a built in data integrator to source data from multiple silos and very low cost of ownership, you really should talk to us if Application Fraud is a major problem area preventing you from realising your full business potential.
Talk to us for a demo of Atreus Application Fraud tool. Read Atreus Application Fraud FAQ for more information.