As mentioned previously, investigation is often the ‘bread-and- butter’ of a fraud prevention department, and must be managed and investigated. This usually consists largely of clerical processes in assessing whether an insurance claim should be paid, whether a refund should be made from a utility supplier of responding to customers that claim fraud has occurred on their accounts; collecting affidavits (another opportunity for preventative statements to be made) and then refunding the amount involved; re-issuing cards as required and looking out for further fraud in the future for similar charge-off and processing.
Two areas of investigation are often neglected:
• Identifying whether customers are being honest about the transactions being theirs. For example, if there are anomalous insurance claim issues or stories that differ or if the fraud is involved in an ATM transaction in Canada and the customer is clearly living in the UK, then there is not much to investigate. Treating everything that the customer says as true and refunding everything, or treating everything as false and delivering a poor customer service to customers, are equally poor strategies. Challenge interviewing, based upon the psychological theory behind what customers say and how they say things to spot fraud has become prevalent for determining the truth in these situations.
• Analysis of fraud losses should drive future fraud investigation and also detection work. For example, when we see a second or third fraud that has a common denominator, such as the spend location or postal area address, we should look into this further. May be a common passenger over several claims or a common phone number or address for delivery. It could be that we have fallen upon a major compromise, a new fraud tactic or gang operating against us. In every case, we should act upon these situations — with major policy changes, corrective actions, changes to systems or other actions like system changes or enhancements.
Author is an eminent fraud management specialist and helps businesses provide fraud detection, fraud investigation, and fraud prevention services, also provides services for bank fraud prevention all across UK, Europe and rest of the World.
You can visit his website at http://www.ukfraud.co.uk/