ID Insight rolls out new predictive model to take on phone fraud

The company has researched tens of thousands of customer phone number changes in the financial services space, and has detected interesting patterns that distinguish legitimate phone number changes from fraudulent changes. The analysis uncovered the following key indicators that signal an elevated risk of fraud:

- Geographic distance. The greater the distance between the new phone number and the old phone number, the larger the risk. Likewise, there is an elevated risk for cases where the new area code is located a large distance from the customer’s current mailing address.

- Carrier type. Changing from a landline to wireless, or wireless to landline often indicates higher risk than going from a wireless number to another wireless number. Certain types of carriers, such as prepaid phone numbers and voice-over-IP (VOIP) lines, are much riskier than landlines or postpaid mobile phones.

- Urban versus rural. A change in phone number from a rural location to one that is tied to an urban center indicates a higher risk than a rural-to-rural or urban-to-urban change.

- Area Code/Exchange. A basic validation check of the area code and exchange confirms that the phone number has been issued to a US customer.

- Ported. Local number portability allows customers to retain their phone numbers when changing service providers. New phone numbers that have been recently ported require a higher level of scrutiny.

- Business phone numbers. A change from a residential phone number to business. For example, a new phone number that is tied to a check-cashing outlet is highly indicative of fraud.

- Phone number verification. When the consumer name can be associated with the phone number though an independent verification source, the risk of fraud is greatly reduced.

Based on this research, the company has developed a predictive model that combines individual risk indicators that help fraud investigators prioritize their queue and work the phone number changes that are most suspicious. By verifying the legitimacy of phone number changes, financial institutions are able to reduce the risks and constraints that may be holding them back from more fully utilizing the mobile channel.