In 2019, 3 in 5 businesses noticed an increase in fraud over a 12-month period. Today, in the face of COVID-19 and the economic downturn, it’s safe to assume that these numbers have increased. In this Sip and Solve session, Experian's commercial fraud expert, Li Mao, discusses the process of introducing friction into credit processes to discourage fraudsters. He'll also talk about: The most common types of fraud you can expect during COVID-19 What first-party fraud is and how you can detect it Tips on how you can combat first-party fraud and more Watch the recording of this webinar: https://www.experian.com/business-information/webinar-sip-and-solve-ep-23-mitigating-fraud-during-crisis

1. 1 © Experian 16/06/2020
Sip and Solve
Mitigating fraud during a crisis
Featuring:
Li Mao
Sr. Product Manager, Fraud
Experian Business Information Services

2. 2 © Experian
COVID-19: Macro Trends
L A T E S T N E W S
Economic
Trends
• Stock market
declines
• Significant impact
to small business
• Unemployment
claims
at record levels
Credit
Trends
• Originations/
inquiries down
• Utilization likely
to increase
• Debt-to-Income
increasing
• Delinquencies rise
Regulatory
Response
• CARES Act for
small business
relief and
payments to
individuals
• Deferred Tax
Filing date
Fraud
• Increased digital
volume invites
additional fraud
• Phishing scams
increasing
• Synthetic ID
and first party fraud
on the rise

3. 3 © Experian
More than one in three businesses have been victimized

4. 4 © Experian
Perfect storm is brewing
Consumers expect
payment forgiveness
programs
Government relief
programs
Responsive
compliance
mandates/changes
Increased
phishing scams
Loss of
consumer
income and
discretionary
funds
Increased digital
banking and
online shopping
Volatile market
conditions in
consumer
behavior,
expectation, and
value/risk Small business temporary
shutdown
Low interest
rates

5. 5 © Experian
Types of application fraud expected to increase
– Thief has no intent to pay
– Early Delinquency
– High Utilization
– Bustout
Misuse of Credit (1st Party)Identity Theft (3rd Party)Synthetic ID
– Thief impersonates a true
consumer and/or
business
– Stolen PII and publicly
available data
– Thief combines data from
multiple sources or creates a
fake ID
– Some manipulate identity to
get away from poor credit
history
https://fi.deluxe.com/community-blog/fraud-id-theft/synthetic-ids-id-theft/
60% of financial institutions
report first-party fraud as the
biggest source of fraud losses

6. 6 © Experian
Segmentation and prioritization strategy
Benefits:
• Reduce costs: Focus manual resources on the
highest fraud risks
• Improve customer service: Expedite your ability
to address your customers who are truly in need
of relief
• Proactive vs reactive strategy: Fraud
prevention after the fact will impact your bottom
line
• Prioritization and activity determined by multiple factors:
― Days past due
― Utilization of remaining balance
― Type of relief requested by customer
― Outstanding $ balance
― Experian BizID / Precise ID / Clarity model suites (SID, 1st party)
• Ability to help and target businesses in true need of your support
High
Low
Score
Credit utilization
Mail / email to offer
support options
Email / phone to offer
support options
Critical to establish
contact by phone
Introduce friction to
re-establish
authentication

7. 7 © Experian
Checklist of risky behaviors to consider solving for
 New device logins and other account take over behaviors
 New phone numbers not previously associated to the account
 Difference in ship-to address and business address
 Balance transfers, wires, and other high-risk or atypical account behavior
 Folding existing business to remove debt and open the same business with a new name
 Using email addresses that differ slightly from the real email address
 (Ex. li@bikeshop.com vs li@bikesshop.com)
 No prior website traffic
 Manipulation of financial and tax statements

8. 8 © Experian
Alternative Data
Synthetic Fraud
Risk Level Indicator
Document Verification
FraudNet
BizID
Behavioral and Biometrics
Unsupervised
Machine Learning
CrossCore
Data, Attributes, and Scores
• Precise ID Model Suite
• Clarity Fraud Risk Score
Consulting
• Experian Advisory Services
• Analytic Consulting
◼ Immediate (<4 month)
◼ Strategic (>4 months)
Challenges / Needs
• Fraudsters abound
• Increased privacy and
data and cyber security
• Synthetic identity and
bust-out detection
• Digital migration
• Enhanced digital
identity verification
• Account takeover
• Risk-based
authentication
Be Aware
Plan for expected spike in fraud schemes and attacks
as digital engagement increases
Anticipate First Party Fraud
Prepare for increase in account activity utilization
and requests for line increases
Segment Identity Theft and Synthetic Identity
Prepare for increase in application volumes
Consumer Behavior Changes
Manage digital migration and consumer expectations
Summary and key takeaways

9. 9 © Experian 16/06/2020
Thank you!
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during a crisis?
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