Posted by & filed under cyber terroism, Digital Policy, fraud, Privacy, Security.

Description: An older type of social network, and it’s being used to help detect fraud. It is the connections between people in the physical world.

Source: Globe&

Date: March 8, 2011

Banks, telecoms providers and insurance companies, among other businesses, are using analytic software to correlate all of their various data sources to produce visualizations of relationships between customers and customer activity so that they can identify suspicious behaviour. And they are seeing incredible results, says Dan McKenzie, fraud solutions specialist at SAS Canada. Financial organizations are finding 20 to 50 times more fraudulent activity than they did without the tools, says Mr. McKenzie, because a computer can quickly analyze much more data than a human investigator and flag suspected mischief.

For example, fraudsters will take out a credit card, run up bills on it (they can get up to 150 per cent of the stated credit limit), then disappear without paying it off. They do this repeatedly under different names and rake in substantial sums of money, with the card issuer none the wiser. But using link analysis, fraud hunters can identify links between these apparently different people, determine they are actually one person and build a map of the fraudulent activity that helps investigators spot the culprit when they apply for a new card.     Read rest of story

Questions for discussion:

  • How can Social networks help businesses detect fraud?
  • Are there any downsides with using these tools to detect fraud in terms of giving up public privacy?

19 Responses to “Banks fight fraud with new social networking weapons”

  1. Mike

    Interesting. When I did my practicum with the local police station, they were starting to use social media to hunt criminals. A few studies have been made including a study made by the UofL a year or so ago, where a fake Facebook profile was created, revealed that people added random people as their friends, allowing them to access the personal information of all the “victims” per se. With an increase in social media popularity, and people’s inability to combat their anxiety to pry and gossip about others, more situations like those of the police and firms catching offenders will occur–ultimately benefiting the ecosystem.

    I personally agree with the practice; People need to start incorporating core ethical values in their professional and social lives, and if this is the way to do it, then let’s celebrate!

  2. Brittni Maurer

    Social networking can help define fraud by looking though a clients personal information and it can detect if something seems out of place. It can be very helpful it solving tons of fraudulent activities with credit cards. It has proven to be more successful then human detectives because computers can sort through files an information much more quick and efficient.
    The down falls in using social networking to detect fraud is that something might look like it is a fraudulent activity because the client has never done anything like that before, but actually it is the client and he will be flagged down for it causing him hassle and having to fix the flagged problem.
    All around though I think that it is a great idea and I will 100% support this practice. It seems to be working and finding more fraud them before so I think that they should continue with using social networking and maybe it will eventually set criminals and info stealers in their place.

  3. Landon

    Social networks allows a bank to detect fraud by using link analysis tools. Since an individual has their own social network consisting of banking, insurance, phone number, place of work and home address, etc. This network can be linked with one another. What fraudsters do is use mulitple ID’s, changing a couple of the variables of their network, if they default on a credit card the bank could see who it is, and compare it to other info that may match some of the criteria (address, phone, etc) with only a couple variables different. They can then compare the spending habits of this individual to see if they are legitimate purchases or a fraudster at work. Businesses can spot out of the ordinary buying habits of people.

    Of course there is a loss of privacy with this, businesses are collecting info on you, every little purchase made, where you are, etc. So that is a downside, because what if this info got into the wrong hands. The businesses doing this must be very trustworthy. Marketing companies are already collecting info on us, so if the data being collected to detect fraud could be kept private then it would be a benefit to the loss of privacy. Using this type of analysis could prevent identity theft, which is one of the ultimate losses of privacy. So you would lose some privacy, but gain the sense of security knowing that it will be much harder for someone to steal your identity.

  4. Logan Redman

    Online banking is easy, fast, and efficient. But if you have it, your entire bank account, your money, is online. Oh but its so safe!! No one can touch it because its very encrypted and the URL states https, so its gatta be safe, right? I’m a skeptic when it comes to the internet. Don’t get me wrong, this virtual space is amazing and I spend a fair amount of time on it. But the amount of personal information that is taken from us and uploaded is unreal and will at some point falter.

  5. Jenn Oloya

    Looking at individual behavior pattern such as their spending habits, where they work and who they socialize with is a good way to differentiate individuals, a way to do this would be to have a social network system that analysis these behaviors and detects suspicious or random behavior. With the help of Social network systems it would be easier and faster for business to detect fraud so it would benefit them buy saving the money and at the same time saving employees or customers from nuisance.
    The downside of using these tools to detect fraud would be that you would have to give up some of your privacy in order for the companies to track you and look at your behavior pattern, but I believe giving some information about yourself in order for you to be safe and secure is worth it. Another downside could be that the person had changed their pattern due to some circumstance and would be seen as a fraudulent activity which could cause trouble and problems for that individual. If social networks are to be used for tracking fraudulent behavior the business should do it very careful and update or maintain system for accuracy.

  6. bretton macdonald

    These social networks are becoming ever so popular in the hunting down of bank fraud and ultimately identity theft. They use software to track and identify a persons personal information and trends and from that they discover any out of place transactions to help pick out people who are stealing credit card information. With everyone using online banking now a days to pay bills and do money transfers makes this so much more important. People complain that there is a lack of privacy as a result but in my opinion its a small price to pay for protecting our money and identity.

  7. Nicole Hendry

    It is weird to think there is a social network that is outside of the internet world. As businesses start to link things such as work, home, phone numbers, banks and other day to day activities it can begin to make connections between similar types of fraudulent behaviour. Through the use of data systems in a computer it can also easily and efficiently compare this information and flag people who may be the culprits.

    I personally think that most people could easily find out this simple information about a person by looking in a phone book. The information used to find the culprits is not out of the ordinary and I don’t feel it is too invasive into someone’s privacy. The benefit of finding the culprit and ending the identity theft that continues to go on by the same person outways the costs of any privacy issues in my mind. I know that I would way rather have someone use my work information, telephone number etc instead of me having to go through having someone steal my identity.

  8. Hugh F

    As everything we do, including our transactions, go online there is more and more financial incentive to go and commit these acts. As the incentive increases with the amount of information and venerability we open up to ourselves, it doesn’t concern me one bit that companies are using any means to protect their customers. Just there always comes the moral decision every company has to make of, ‘what happens if we stumble along buying trends or valuable information that can be legally used to generate profit?” How many companies, given these legal means and assuming no backlash, would ignore valuable information?

  9. DC

    Since social networks are now like a gateway for people to discuss their personal lives, it’s easier for the authority to track down things that someone couldn’t say with their mouth face to face online, for example one guy who stole casino chips in Las Vegas worth over $500 000 then later on started discussing their price with online social media friends, and this resulted in his arrest. Moreover people leave their personal information online, for example when you sign up for face book you can add your address, email, friends and family. This is usually the information that private investigators used to find after spending a budget of million dollars. Now it’s also like all it takes is few clicks to know someone’s travelling patterns, social networks and even employment details. All this are key components when tracking down a fraudster. There is however a downside to it, people will have to give up their privacy for investigators to fully utilize the social media when doing investigations. What’s even worse is that they might end up having mistaken identity and risk arresting the wrong person if the fraudster is witty with his online activities.

  10. selena759nova

    ■How can Social networks help businesses detect fraud?
    ■Are there any downsides with using these tools to detect fraud in terms of giving up public privacy?

    well as long as people arent aware of this in mass, it would be easy enough to navigate social networking sights to find out legitimate/illegitimate connections between real/false people. allowing educated guesses on legitimacy by family, employment, activities and locations. the problem is many people do in fact develop pseudo identities online already, either in combat of privacy invasion or because there is something to hide, making it more and more difficult to get accurate information from these sites.

    the downside is then, invasion of public privacy. it may be for a good cause, but wherever there is opportunity to exploit something for the good, there is room for abuse. where is the line drawn, who draws it and how is it regulated are tough questions to answer.

  11. Jatinder Aulakh

    •How can Social networks help businesses detect fraud?
    •Are there any downsides with using these tools to detect fraud in terms of giving up public privacy?

    I think it is really scary to know that credit card fraud rate has become really high. Anyone could steal my identity and my card by just knowing general information about me. I think it is good that banks are coming up with fraud detectors to prevent credit card thefts. Social networks help businesses detect fraud by using software to track people’s personal information and see where they are spending and how much they are spending. If they are suspicious about anything they will call the credit card owner to make sure they are the ones using that credit card.
    To this advantage there are some downsides to detecting fraud. By using this tool people are giving up their privacy to companies and also sometimes a change in pattern on how where and how often you use your credit card can make it look like that you are a fraud when you aren’t.

  12. Clayton Varjassy

    This is an interesting concept but it is clear that it has it’s benefits. Rather than having to put a credit card on hold because someone is on vacation in Mexico, the company would have the ability to analyze and interpret a person’s “network” which would reveal that that person is actually in Mexico and there is no need to put a hold on the credit card. I think the credit card companies already know a great deal about us to begin with, so I can’t see much of a downside in using the information they know to help improve their services. Credit card issuers are companies to, and it is in their best interest to reduce fraudulent activity while maintaining a strong customer loyalty. If they deem that the cost benefit ration for implementing this technology is positive then it is in their best interest to do so. If a person thinks they are giving up public privacy then they can choose for themselves to stay out of out of the lime light.

  13. Derek Wilson

    Utilizing social networks is becoming a more popular means of detecting various forms of fraud. This particular type of fraud is a very real and concerning issue for many individuals who can lose a great deal of money without even realizing it. With the help of analytic software bank fraud can be more easily detected through the use of data which works to identify patterns between customers and their spending activities. The results of employing this specific software are actually quite impressive and will continue to improve with the advancement in technology. This analytic software uses personal information to isolate an irregularity pertaining to a specific customer. Some individuals may perceive this as an invasion of privacy, but the personal information gathered is readily available to anyone with this kind of software, and it remains secure and private at the bank. Of course there is the risk that one’s personal information will be hacked and stolen, but this is a constant risk on the internet with any activity. It is the hope that the pros outweigh the cons when it comes to obtaining personal data for detecting fraudulent patterns, and in this case, I believe it does.

  14. Simar Duggal

    How can Social networks help businesses detect fraud?
    The amount of credit card fraud is one of most concern these days, the amount of fraud that takes place is both astonishing and scary. The attempt to bring these frauds down to a low by companies is a a great idea. Social networks can help by being able to track transactions, and tell people when there are potential culprits using there information.
    Are there any downsides with using these tools to detect fraud in terms of giving up public privacy?
    The only downside of these tools is the amount of information people have to give away. Companies are able to track every transaction you make and you are potentially letting fraud companies/people figure this out. In my opinion there are more pro’s to catching a culprit and then con’s to giving out information to companies that are creating apps’ to make my life easier.

  15. Chelsa

    Social networks can help businesses detect fraud because it allows the business to see what the person is actually doing in their life. If a person is traveling and they use their credit or debit card the business could check and see if that person is traveling with a spouse if transactions are made in the same place around the same time on the spouses card. This would mean that people would no longer randomly get flagged and have to contact the bank or credit card company to reactivate their card at they are actually on vacation. It also allows the business to tell when someones credit card is being used by someone other than the holder in the same way. There are downsides because it reduces your privacy. It allows businesses to look into your activities because someone you may happen to know is being investigated and they are doing this without your consent.

  16. Todd McCune

    Social networking helps detect fraud by putting together patterns of personal information and tieing them to the fraudsters that use them. Taking someones personal data and connecting it to numerous fraudulent activities can narrow it down to one person or a group of people that are performing the fraud.
    There is always going to be the question of giving up privacy, but if you’re using the internet for the right reasons then you should have nothing to hide and not have any concerns if some of your personal information is made available. Look at people who put their entire lives on facebook or twitter, they have no problem telling people their day to day activities and giving up their address and phone number so they should not have a problem if their information is available to the people who are trying to crack down on internet fraud

  17. whyte

    The banks make connections between your name, address, phone number, work, and transaction history to create a network between individuals, and look for links that show signs of fraudulent activity. Individuals and Companies both suffer losses due to identity theft, and this method allows companies to fight back against the thieves. I dont believe that these networks that are being generated violate public privacy. The Banks and credit-card companies are simply connecting data that they already have to help protect your identity. Banks and credit-card companies are very protective of their clients information and i would assume that the networks that are created will be protected in the same way existing information is already protected.

  18. Kevin Beauchamp

    Social networking contains a vast wealth of information that can be used
    to detect frauders. Investigators are able to look at the victims of
    identity theft and notice any consist links that exist between them.
    These links can be put together to possibly identify the culprit, such as
    friends, addresses, and occupations. Another useful tool users can use is
    a timeline. They are able to correlate what changes are made in someone’s
    profile with the signs of identity fraud, such as going over credit and
    not using the card anymore. This is essential as a frauder’s contacts are
    likely to change in relation to the number of attacks they make.
    Obviously in attempts to catch frauders, people are going to be
    unnecessarily spied on. Some maybe become upset as they only want they set
    of friends to view their profile. If the spying is being used for good, it
    shouldn’t cause much of an issue.

  19. mike

    Social Networks can help businesses detect fraud by using analytical tools that can help spot out suspicious activity and red flag these suspicious activities so that they can be further investigated to see if there is potentially fraudulent activity occurring. This is beneficial to the businesses because serial fraud is eating away at company profits and these new ways of detecting fraud are more effective at pointing out redundant data entries faster and more readily than methods that were used prior. This method cannot only detect the person committing the fraud but can also lead to those who aided in the fraud – workers approving mortgages, loans, credit card applications, etc. I don’t know if there would be any issues giving up public privacy. Marketing companies are able to obtain similar data, so how would it be any different if these fraud detectors are gathering essentially the same data. There are so many other ways that people can break through privacy barriers that I don’t think this will have much of an impact.

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