March 29, the Boston-based anti-fraud firm FiVerity announced a new, “holistic” fraud analytics platform.
“The current approach to fraud detection is broken,” Greg Woolf, Founder and CEO, said. “Financial institutions are spending billions, yet continue to lose massive amounts of money to digital fraud.”
The release expanded FiVerity’s fraud prevention tools, providing finstitutions with an interconnected approach to stop criminal activity. The platform shows fraud solutions next to external data sources and fraud scores from anti-fraud and cybersecurity teams: A comprehensive view of all digital fraud-related data within an organization. As a result, customers gain immediate visibility and an actionable score for each new account.
Machine learning to find stability
The firm uses machine learning to paint a picture of the threats facing an organization that uses the platform. FiVerity said they stabilize each user’s defense by enabling secure information sharing across financial institutions, regulators, and law enforcement agencies.
“With our holistic approach to fraud prevention, we don’t replace an institution’s current fraud detection systems and data investments,” Woolf said. “Instead, we maximize them by corralling their data into a single, simplified view and then providing customers with the actionable insights needed to fight back.”
Financial services organizations recognize the growing threat of digital fraud: a Grant Thorton study found 71% of anti-fraud professionals expected a significant impact of fraud on their organizations after the pandemic.
According to a recent Lexis Nexis study, the average US financial services firm has nine-12 fraud solutions and misses 42% of all fraud attempts.
FiVerity said its approach could save organizations billions of dollars by preventing fraud losses and optimizing previous investments in fraud solutions.
They found its model could improve fraud detection rates by 74% over the models used by many of today’s anti-fraud solutions while optimizing the anti-fraud team’s time by scaling their efforts.
Patience, young grasshopper
Grasshopper, a digital bank that recently relaunched (initially launched in 2019), is one of FiVerity’s first partners using its fraud intelligence solution to strengthen its fraud-fighting initiatives.
CEO Michael Butler joined the Grasshopper team in 2021 after helping broker the sale of Radius bank to LendingClub. He is using the opportunity to upgrade Grasshoppers systems.
“FiVerity helps us take an aggressive approach to fraud detection. Its comprehensive offering bolsters our existing identity verification and cybersecurity solutions,” Butler said. “Together, we will design and implement protections for our small business and startup clients.”
Butler and Grasshopper, after its relaunch, has also done some major spring cleaning at the beginning of March, scuttling its old banking core and adding the system “FIS IBS” that Butler used at Radius.
FiVeritys new platform matches the revamp Grasshopper aims for.
“The platform’s flexibility is critical to meet the needs of our expanding product lines, and working together with innovative fintech like FiVerity helps keep us on the leading edge — delivering superior value to the businesses we serve,” Butler said.
‘Filthy synths’
FiVerity’s CEO Woolf, in a contributed piece in Banking Exchange last month, opined on the dangers of a new trend in financial fraud: Synthetic Identity Fraud (SIF.)
“Of all forms of cyber fraud, none is more difficult to detect than [SIF,]” Woolf wrote. “For those unfamiliar with SIF, criminals create synthetic identities composed of personally identifiable information (PII), including names, addresses, and social security numbers, stolen from multiple people and combined together to form an entirely new persona.”
These digital Franken-people are used to build real credit histories, Woolf said, to build up a long con with an end goal heist in mind worth tens of thousands of dollars. According to McKinsey & Company, it was one of the fastest-growing crimes in 2019.
“The 2021 Synthetic Identity Fraud Report, utilizing data from FiVerity’s Cyber Fraud Network™, estimates that $20 billion was lost to SIF in 2020,” Woolf wrote.
The seedy underbelly of Web 2
According to research firm Comparitech, personal information from U.S. citizens found on the dark web, like SSNs, and stolen credit card numbers, is worth, on average, just $8.
Hackers build fake accounts that mirror a typical customer, maintaining a relatively low balance and paying their bills on time. Then, six to 18 months into the credit history, they break out the bag with the money sign.
“It’s a systematic process that keeps them out of the spotlight until they are ready to strike,” Woolf wrote. “At this point, they bust out with $81,000 to $97,000 in stolen proceeds. Their crime goes undetected when financial institutions attribute the theft to bad underwriting.”
