What's the Best Approach to Tackle First-Party Fraud?BM Technologies' Steve Lenderman on How Banks Must Leverage the Data They Have
First-party fraud is all about intent, and banks have to determine whether the individual carrying out the transaction is doing it intentionally. That's hard to do for a basic binary decision model, says Steve Lenderman, senior vice president and director of global loss prevention and fraud at BM Technologies.
The U.S. government has been rooting for a consumer-friendly regulatory environment in which banks will likely have the liability for fraud - whether it's first-party fraud or third-party fraud.
"People committing first-party fraud will have some signs," Lenderman says. "You might see decreases in their credit score in the past 30 to 60 days or an increase in their debt. These things are currently looked at from an account onboarding perspective."
Lenderman says banks can learn a lot from transaction activity. "For example, if they carried a $2,000 balance and now they have a balance of $20,000, what type of activity is taking place? Has it shifted to car payments or mortgage payments? The key is to spot the shift in behavioral spends."
In this video interview with Information Security Media Group, Lenderman also discusses:
- How banks need to tackle first-party fraud;
- The potential impact of shifting fraud liability to banks;
- Whether it make sense for banks to develop fraud models in-house.
Lenderman oversees fraud prevention for all lines of business. He has been working in the financial crimes sector for more than 25 years.