Moving First-Party Fraud Out of the Bank’s Blind Spot

Unlike identity theft, first-party fraud is harder to spot when a consumer opens an account. To guard against this growing blind spot, banks need to invest in transaction-monitoring tools and take a more holistic approach to fraud, said Ian Mitchell, co-founder of Mission Omega and founder of The Knoble.

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“There needs to be controls upfront – looking for first-party fraud, but at the same time, it needs to be through the life cycle of the account,” Mitchell said, adding that few banks of any size have adopted this approach.

Once the account is open, first-party fraudsters will typically apply for loans and misrepresent the facts – in a pattern of abuse. “So, fraudsters are coming in and opening accounts, and that pattern of abuse starts manifesting,” Mitchell said. “It starts showing itself while the customer, being the fraudster, has established themselves as a good customer. And so for that reason, transaction monitoring is really important.”

In this video interview with Information Security Media Group, Mitchell discussed:

• The cross-industry gap in addressing first-party fraud;
• The role credit repair companies play in facilitating synthetic identities and fraud;
• Regulatory expectations and how the industry is responding to them.

Mitchell, who leads fraud prevention at Omega FinCrime, also founded The Knoble, a nonprofit global network of experts with a passion for fighting human crime. He also serves as a financial crimes advisory board member at the American Bankers Association. Mitchell previously led PwC’s Financial Crimes Unit and fraud management practice.