Software

Fraud Detection
From time to time we learn of new products that may be useful in preventing fraud losses.

FRAUDetect is a Maryland-based company that develops software systems designed to identify fraud and deter financial abuse. Its software was developed for the banking industry, but has application for title insurance and mortgage companies, and virtually any company that extends credit on the basis of a person's identity and credit history.

Many financial crimes are perpetrated by persons posing as someone they are not. The art of deception is a critical element in any fraud scheme and false fronts are an important part of the scheme. Because patterns of deception are almost always predictable, they can often be identified and compromised prior to execution if the proper controls are in place. FRAUDetect software products facilitate proper controls.

RiskFinder and RiskTracker are two software products offered by this company. The software was developed by the company's founder, Robert K. Cofod, a retired 25-year Air Force intelligence officer. Mr. Cofod's military background was in intelligence gathering and in building and operating analysis systems, including deception and counter-deception intelligence systems. His knowledge provides the basis for this new software.

RiskFinder is a PC-based customer identification screening system that detects abnormalities in application data and assesses the potential risk of the person not being real. It does not just pass or fail an applicant but assigns a risk factor based on over 100 data validation checks.

The software has several unique features. An algorithm drawn from microbiology and DNA string matching is used throughout the system to refine the risk factor analysis. This technology filters the information and eliminates the need for the operator to wade through lots of possible hits. The system records the results of the operator's decisions to accept, monitor, or deny an account and then automatically updates the appropriate database. In a banking environment, RiskFinder can be integrated with FRAUDetect's transaction monitoring product, RiskTracker.

RiskFinder searches names against a file of previously known undesirable persons or companies and an optional OFAC (Office of Foreign Asset Control) file, which monitors foreign nationals specifically designated as problems by the Department of the Treasury.

Customer addresses are matched against known suspicious addresses, P.O. boxes, and Mail Boxes Etc. suites, jails and prisons and other known high-risk addresses. An algorithm is used to determine the specific validity of the address.

Phone numbers are checked against a telephone database to validate that the area code and prefix are consistent with the address and zip code. The phone number is also checked to identify whether it is a pay phone, cell phone, or pager.

Date of birth and Social Security numbers are matched against a SSN file to determine if the number is valid and if it was issued on a date consistent with the DOB.

RiskTracker monitors the deposit and withdrawal behavior within an account. Nearly half the banking industry's check fraud losses come from fraudulent checks being deposited into an account and the money withdrawn before the checks are returned. RiskTracker tracks suspicious deposit behavior patterns within the account through a year or more of activity. By monitoring behavior, the software will alert the bank when suspicious activity is taking place on the account. FRAUDetect can be reached at (410) 867-8217.