For example every insurance claim from any insurance company is run through fraud detection software. Turns out there are some characteristics of a fraudulent insurance claims that have been identified over the years. The software can flag a claim as potentially fraudulent for further human review.
Discover Card's fraud detection worked extremely well in my case. My CC number was stolen and after only two fraudulent transactions (total about $500) it tripped the software to freeze the card. I have no idea how they identified those as fraud so quickly, they didn't seem out of place to my eyes considering my transaction history.
Sometimes the pattern only exists in data writ large.
For example, a particular merchant is breached, and then the fraudsters try to run most of the cards stolen in that breach at a few locations.
It could be obvious on your bank's end that a few dozen customers made a charge at Store A and then reported a charge at Store B to be fraudulent, so then they decided to freeze the cards of everyone with the same Store A -> Store B pattern.
I've heard that good signals are things like small gas purchases at a gas station you haven't been to before; they're used to test card validity at a pay-station with no human present.
This has been such a common signature for fraud over the years that I'd be surprised if many fraudsters are still doing this.
If they were smart they'd buy a chocolate bar from a grocery store that has self-checkout, then buy something a little more expensive from Target or whatever, then buy the very expensive thing they really want.
a guess: probing the available balance. Presumably, you only get a couple shots at the apple store to buy that laptop because a single person isn't going to be able to try 5 cards with different names on them in a row without the police being called.
Quite possibly, they saw the same item purchased 5 times within minutes, all off of other Discover cards. You'd only see the transaction that used your number.
For example every insurance claim from any insurance company is run through fraud detection software. Turns out there are some characteristics of a fraudulent insurance claims that have been identified over the years. The software can flag a claim as potentially fraudulent for further human review.
I worked for an insurance company for over 5 years, processing claims. This is the first I have ever heard this. Which does not prove it to be untrue but does make me skeptical.
We had some claims automatically paid via computer but most claims were reviewed by human eyes. Humans were trained to look for indicators of fraud. There was no one thing that would get it sent to the fraud department for investigation. We were looking for a pattern or multiple indicators.
>We had some claims automatically paid via computer but most claims were reviewed by human eyes. Humans were trained to look for indicators of fraud. There was no one thing that would get it sent to the fraud department for investigation. We were looking for a pattern or multiple indicators.
Oh, I'm never saying that claims get paid automatically or that humans don't look for fraud too.
I'm saying that there is also software on the back end that flags things to go to the fraud department automatically. Probably without your knowledge. I just remember reading an article about it a while ago - just about how good it has gotten over the years and it has become an important part of the insurance industry.
Just another example of extensive data mining.
When I say "every insurance claim from any insurance company" I mean that I assume any insurance company worth anything would be running such software.
Ok. But I think you are still misinformed --> For example every insurance claim from any insurance company is run through fraud detection software.
From digging around, this seems kind of a new trend. I seriously doubt that "every claim at any insurance company" is being analyzed this way. And, sure, it's possible it was in use at the company where I worked and I simply did not know. But from reading some of what you linked to, I doubt it. (Though perhaps that has changed since I left.)
From one of the sites you linked to:
"Industry research indicates 10 percent of all claims contain an element of fraud," says Wolfe, and as of the end of 2010, CNA was seeing just 3.7 percent of its claims referred as potential fraud. "That’s considerably below the industry average, and we wanted to find out how much we were missing that wasn’t identified by our adjustors."
So, yeah, that's relatively recent and the searches I did sort of imply that this is an emerging market, they are still trying to convince insurance companies to do this, etc. Insurance is a very conservative industry. They tend to be somewhat slow to adopt new technologies. They are regulated by both federal laws that cover financial companies and also federal laws that cover medical companies (like HIPAA). So they have a huge regulatory burden and this makes change especially hard. Any new tech or new processes have to really be put through their paces to see if they still pass muster on multiple fronts. The de facto result is that insurance companies are kind of sticks in the mud.
Where I worked, a lot of the software was homegrown. It had been developed in-house. They didn't like hiring outside vendors/buying outside solutions. From what I gather, they were fairly cutting edge -- though, of course, it is possible that was just company hype. Since I worked there, I sometimes knew that some statements amounted to spin-doctoring. But I did only have an entry level job and was not really expecting it to turn into a career, so I am sure there is plenty that I missed.
Oh I was probably somewhat misinformed because the article I read a while ago was much more hyped up than I realized at the time. My apologies. I got the wrong impression.
I just assumed it had already become "industry standard." Perhaps it was "becoming industry standard" instead. I think the article was specifically about car (not health) insurance too but I can't remember details. I went to go find it again before posting but of course I couldn't.
I also somewhat suspect (but I have no proof of course) that there is at least a little bit of data sharing to third parties that insurance companies can/do use to get more of the "big picture." Probably more car insurance than health insurance. I know such a thing as a "driving record" exists probably supplied by a company such as LexisNexis. My car insurance provided me a copy of my driving record.
So for example Person A has a pattern of behavior through different insurance companies that can be flagged while just looking at one insurance company's data might not show the data.
This is all wild speculation on my part more of a thought experiment on my part. Laws such as the FCRA are starting to address SOME of these issues but I'm not sure they are on top of all practices.
This type of tracking has become more common in the age of "big data."
That's interesting though that they didn't like hiring outside vendors. I would think they would want outside vendors because their products were already vetted for regulation compliance.
I don't recall who, but there is a (government) agency that gets reports. I don't recall exactly what gets reported but, yes, there is a mechanism in place for trying to identify fraudulent activity by one person/group across multiple insurance companies.
That was not my area and I no longer work in insurance. I don't recall the details. But, yes, that is a thing.
For example every insurance claim from any insurance company is run through fraud detection software. Turns out there are some characteristics of a fraudulent insurance claims that have been identified over the years. The software can flag a claim as potentially fraudulent for further human review.
Discover Card's fraud detection worked extremely well in my case. My CC number was stolen and after only two fraudulent transactions (total about $500) it tripped the software to freeze the card. I have no idea how they identified those as fraud so quickly, they didn't seem out of place to my eyes considering my transaction history.