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Feb. 14, 2013 - Authenticating IDs Reduces Fraud by Over 80%

Sean Trundy

describe the imageThe results are in, and even we have to admit that we are astounded by what has happened. 

We have always known the tremendous power of deterrence. That is, taking active steps to inform potential criminals that you are on the lookout for their fraudulent efforts to steal your profits.  This has been a cornerstone of our strategy discussions with clients ranging from Bank of America and Wells Fargo, to Kohls, Macy’s, In n’ Out, Subway and thousands of other organizations utilizing our products.

When the bad-guys see that you are doing something to detect their counterfeit documents (regardless of whether it is currency, ID’s, credit cards, money orders or whatever) they will turn right around and walk out of your store rather than risk getting caught.

FraudFighter™ has a client that is a national electronics retailer.  We have executed confidentiality agreements, and thus, are not at liberty to discuss names, or specific dollar amounts.  However, we can say that in some stores, they had seen sales involving certain types of cell phones producing fraudulent transaction rates as high as 22%.  Compliance To The Bank Secrecy Act

Armed with fake credit cards, fake ID documents, and answers to “database authentication” questions purchased together as a package from “dark market” websites in Canada, Serbia, Ukraine, China and other locations, these perpetrators would purchase 3 or 4 high end smart phones, on new credit applied for and approved in the store.  Losses of $1500-$1800 per event were not uncommon.

When we were approached by this company, we knew right away that thID Authenticatione answer lay in conducting ID Authentication, real time, during the transaction.  However, this was NOT “ID Verification”, where a software program randomly generates questions based on public records. Instead, we convinced this organization that the required solution is real-time ID Document Authentication, utilizing sophisticated forensic document testing equipment, such as the B5000 and ID-150 products.

After testing and some custom back-end work to integrate equipment into their IT systems, we rolled out a pilot project into 20 high-risk locations.

The result?  After 90 days, it was seen that fraudulent transactions were reduced by over 80%!  The pilot project  was paid-for within the initial 90 days on the basis of reduced losses, alone. 

Of interest to our client was that they had detected very few fraudulent transactions.  Instead, what seems to have happened is that the criminals simply chose not to attempt the fraud in the first place.

It would be one-thing if this was a unique or unusual experience.  But, it is not unique.  We have heard similar results from our clients on a regular basis, for over a decade.

The fact of the matter is, if you initiate a program – any program – designed to make it overtly clear to potential fraudsters that you will be conducting document authentication during the transaction, you will see tremendous reduction in fraud.

Our line of Ultra-Violet Lights, of which we have installed more than 700,000 units, nationally, work on this same fundamental basis.  While it is likely that your cashier or teller can and will detect fraudulent currency, credit cards, driver licenses, and more, by utilizing the machines during the transaction, the true value lies in knowing that the majority of criminals will choose not to present their fraudulent document in your locations.

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