Worst Practices in Fraud Monitoring
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Author: Ildi Morris
Ildi is the Director of Training at Memento. For five years, she has led the design and delivery of training and development programs for customers and internal staff. Ildi plays a key role in helping clients understand and implement software solutions to manage fraud.
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I always chuckle to myself when I see a heading for an article entitled, “Best Practices in [fill in your favorite topic here].” After all, who wants to hear about someone’s worst practices?
But as someone whose job it is to educate fraud experts on how to use new technology tools for monitoring and detection, I hear a lot about practices that aren’t so effective. Banks and credit unions, large and small, wrestle with many of the same issues when it comes to fraud management. Here are common challenges that I’ve heard:
1. Monitoring Fraud in a Silo: Fraudsters don’t usually limit themselves to one type of fraud, so why should we separate our monitoring by different fraud areas? Although it makes sense for FI’s to dedicate experts to specialize in different fraud areas, we need to think about approaching monitoring across channels. Banks who have addressed this problem make adjustments in business processes or employ technology tools to build more collaboration between teams, and make sure there is full visibility into fraudsters’ actions.
2. Misinterpreting Your Data: Your institution’s financial data is usually from a complex combination of legacy and newer systems – it can be densely packed with multiple fields, some of which are unrecognizable. But understanding how the data is generated and what exactly it contains is key to detecting fraud. If you or your team members don’t understand your data or have easy access to it, find out who to ask. Fraud experts who become data experts are doubly armed to help prevent your institution’s next big loss.
3. Not Keeping Up with Fraud: If you have a monitoring system in place generating alerts, make sure you review the fraud scenarios on a regular basis Fraudsters aren’t sticking with the same schemes, and neither should your monitoring system. Working with your solution provider to pull in additional data sources for monitoring, improve existing scenarios or add new ones will help ensure you are keeping pace with emerging fraud schemes.
If you have faced any of these challenges, how have you dealt with them? What are some other ‘worst practices’ that should be avoided or repaired?