MASSILLON, Ohio–(BUSINESS WIRE)–SubscriberWise, the nation’s leading provider of analytics-driven
subscriber risk management, announced today that its CEO has put the
brakes on an identify theft that duped at least 5 U.S. credit grantors
and included more than a dozen fraudulent credit inquiries, while
potentially compromising the credit rating of a minor child. The action
culminated with alerts to law enforcement, several victim creditors, the
Identity Theft Division of the Federal Trade Commission, the three
national credit reporting companies and consultations with scoring and
fraud experts at FICO.
“Parental identity theft is specifically the most common identity theft
for communications operators across the nation”
According to a fraud expert familiar with the investigation, the scheme
involved 47 unauthorized-user trade lines, between two national credit
card accounts, and among unrelated individuals around the United States;
all accounts associated with the fraud were immediately frozen at the
national repository following the revelation from SubscriberWise.
“Parental identity theft is specifically the most common identity theft
for communications operators across the nation,” said David Howe,
president of SubscriberWise. “In virtually every instance involving
parental identity theft, a parent with an unpaid service account
contacts the operator with their minor child’s identity information and
attempts to obtain service under false pretenses. Typically, operators
are provided the child’s legitimate name and SSN, but given a fictitious
date of birth in an attempt to circumvent the fraud. In nearly all of
these situations, SubscriberWise generates an exception when attempting
to verify identity elements with the information systems it queries.
When elements fail to match, the system returns an instant alert to
CSR’s with specific instructions or recommendations of how to proceed.
SubscriberWise then stores reports for review by managers, thus
providing additional opportunities to proactively uncover any predatory
behavior before it’s too late.”
“Although the situation today involved a similar parental misuse of a
minor child’s SSN, the scenario here was far more egregious because the
usual alerts were not instantly triggered during the credit
prequalification process. Instead, the credit system processed the
application successfully and returned a favorable decision to our member
operator; it’s the very same process that allowed at least 5 other
creditors to unwittingly approve their fraudulent applications and
worse, extend credit.”
“Fraud experts today call it synthetic identity theft because it
involves a variation of assuming another’s identity,” explained Howe.
“In this case, the parent was able to associate his legitimate identity
information with the child’s SSN. The danger of this behavior is obvious
because when the victim is a child of the perpetrator, the crime can go
unreported for a long time since children aren’t in the market for
credit and certainly not actively monitoring credit accounts for
fraudulent or suspicious behavior.”
“Clearly this scenario was far more methodical than a simple fraudulent
service request using a minor’s SSN,” continued Howe. “What’s troubling
here is that a credit file was actually created with the national
repository through an auto finance inquiry using legitimate identity
elements, but fraudulently associated with a child’s SSN. The file was
created when indicative information was submitted as part of the initial
online application.”
“And that’s when the trouble really began,” stated Howe.
“Although the initial file didn’t contain any trade accounts, and was
therefore non-scorable, the perpetrator was able to obtain two credit
card accounts that were added to the new-to-credit file – a process
called piggybacking – that contained positive payment behavior during a
multi-year period. The addition of the trade accounts allowed the file
to generate a credit score, providing the illusion of a credit worthy
individual – and ultimately approval of several credit applications.”
“The SubscriberWise decision management system incorporates an analytic
scoring algorithm with an independent and specific rule set for
generating a credit score. To calculate a credit score using this
technology, the system requires an individual to have a bureau file at
the national repository, with at least one account six months old or
older that’s been updated by a creditor at least once in the previous
six months,” explained Howe.
“Given the rule requirements of the scoring algorithms, and combined
with due diligence features in the SubscriberWise decision management
system, our system triggered a manual review of the otherwise favorable
application. It was during the manual review that we identified a credit
report that contained only 3 months of file history, but from a credit
applicant that happened to be 40 years old; a genuine concern unless the
applicant also happened to be a recent immigrant, which could explain
the new file. In other words, we’d expect a 40 year old to have about
two decades of bureau history – not 12 weeks,” suggested Howe. “However,
after additional investigation, we confirmed two unauthorized credit
card accounts that were aged between 3 and 5 years, associated with the
report. We continued our investigation by submitting the suspicious SSN
to a database that indicates the year and location of issuance. The
system revealed the SSN was issued only 15 years ago, another strong red
flag for a 40 year old applicant. Finally, after confronting the
applicant directly to verify additional identity information, the
perpetrator admitted the SSN belonged to his child.”
An audio excerpt of the telephone conversation confronting the applicant
is available by clicking:
http://www.subscriberwise.com/SyntheticIDThef.wav
“There is no end to the number of clever schemes people will devise in
an attempt to obtain our products,” said Massillon Cable president and
SubscriberWise member Robert Gessner. “It is very comforting to see that
SubscriberWise is equally clever, diligent and in the forefront of
developing new methods to detect and stop fraud. SubscriberWise has been
fundamental to the elimination of virtually all bad debt and the
recovery of virtually every single piece of customer premise equipment
without jeopardizing our buy-in rate for new customers or upgrades.
Maintaining that high level of performance is important to us.”
“I’m very pleased with the system we’ve developed at SubscriberWise,”
concluded Howe. “SubscriberWise is proven a powerful and cost effective
risk management tool for our member operators. But today it’s also
provided an indirect benefit to a child by protecting him from behavior
that could result in an unfavorable credit rating when he’s ready to
obtain legitimate credit as an adult.”
About SubscriberWise
The nation’s first Issuing Credit Reporting Agency for the
communications industry, SubscriberWise® employs enhanced Subscriber
Level Segmentation technology to precisely identify credit challenged
subscribers to ultra-high achievers to maximize sales and boost profits.
By incorporating years of communications performance data and
proprietary decisioning models, including FICO’s latest analytic
technology (FICO® 8 Score), SubscriberWise delivers unprecedented
predictive power with a fully compliant, score-driven decision
management system. Combined with Red Flag compliance and
operator-controlled rules, SubscriberWise analytics empower CSR’s to
instantly and accurately respond to payment and credit characteristics
with appropriate options for every subscriber. With SubscriberWise, no
subscriber request is ever denied because of credit risk factors.
SubscriberWise is a registered trademark of SubscriberWise Limited
Liability Company
FICO is a registered trademark of Fair Isaac Corporation
Article source: http://www.businesswire.com/news/home/20110113005921/en/U.S.-Creditors-Criminally-Duped-SubscriberWise-Chief-Exposes
Category: Identity Theft Watch