Product: ID Score
Company: ID Analytics

A new solution from software developer ID Analytics adds another dimension of defense in the battle against fraud and identity theft. While most financial institutions have measures in place to prevent fraud and reduce risk, the software from ID Analytics is different because it stops fraud at the point of application.

Released in May 2003, the software, called ID Score, is designed to sift through thousands of applications for credit cards, bank accounts, wireless phones and other types of credit-dependent accounts. Using a patent-pending technology, the software scans applications and looks for patterns in the information included on them. Consumer companies such as telecommunications, financial services, retail and hospitality are able to spot potential fraud in real time before it happens. The software already has helped reduce losses for businesses by as much as 40%.

According to Steven Gal, Vice President of Corporate Development and General Counsel for ID Analytics, traditional types of fraud-prevention tools focus on detecting unusual purchasing activity. But ID Score begins evaluating information at the beginning of the account-opening process, when identity thieves use stolen information such as social security numbers to obtain cell phones, rent or buy houses, take out loans, collect tax returns and purchase big-ticket items.

Using a trademarked and patent-pending technology called Graph Theoretic Anomaly Detection (GTAD), ID Score analyzes huge volumes of transactions, looking at elements like name, address, phone and social security numbers to establish patterns of behavior. These variables would not have been identified without the cross-industry cooperation ID Analytics received.

The company's research also showed that 60-80% of losses posted by companies originally classified as bad debt actually were fraudulent. With losses to financial institutions expected to reach $4.2 billion in 2003, there potentially is a lot of money to be saved.

During the development process for ID Score over the last year, ID Analytics partnered with 13 credit-issuing consumer companies in the first-ever cross-industry identity theft research. To compile the patterns, they analyzed identity information from hundreds of millions of credit, debit and wireless phone applications as well as accounts either confirmed as or suspected of being fraudulent.

"We've identified hundreds of fraudulent patterns," Gal said. "Fraud rings will often use the same numbers, for instance, to obtain cell phone numbers and addresses, then bank accounts, debit and credit cards, and make online purchases. There are differences between good guys and bad guys, so you have to be able to tell the difference between a fraud house and a frat house."

The software looks for anomalies and compares the information against a large database of patterns. Results are given within two seconds. What it does not do is make recommendations on whether to approve a credit application; it's up to the credit issuer to determine if more verification is necessary or if the application should be approved at all.

"We deliver ID scores to our clients to help them make decisions on identity verification," Gal said. "If they discover that one of their customers may have had their information stolen, they send a letter to the consumer warning they may have become an identity theft victim."

Gal said ID Analytics does not sell data or give it to third parties and works with direct and channel sales distributors. The technology is appropriate for acquirers, payment processors and large retail or online businesses; it currently is working with Citibank, Discover Financial Services, Dell Financial Services, Sprint and First North American National Bank. Along with preventing financial losses, ID Score also helps companies comply with federal regulations of the USA Patriot Act that require them to know their customers.

ID Analytics, Inc.

P.O. Box 23071

San Diego, CA 92193

858-427-2800 or 866-240-4484

www.idanalytics.com