Identity Resolution Daily

By Douglas Wood, Infoglide SVP of Sales and Services

I noted with interest the August 31 announcement that IBM is buying UK based i2 Inc.  I was in my hotel room when I read the announcement, attending the International Association of Financial Crimes Investigators (IAFCI) conference in Charlotte.  I was actually so surprised that I dropped one of my shoes onto the floor as I was hurrying out of the hotel room.

Perhaps I should not have been so shocked, though.  It was clear to me that the 2009 COPLINK/i2 ‘merger’ never quite developed the way either party had intended, and that neither entity was working particularly well with the other. Looks like IBM saw the same thing and swooped in to put the pieces together.  Good play on their part.

With loads of customers in several countries, i2 is a large provider of intelligence analytics for crime and fraud prevention serving the banking, defense, health care, insurance, law enforcement, national security and retail markets.  I suspect that IBM’s plans will include integrating the i2 and COPLINK platforms into the overall Infosphere portfolio, particularly the Identity Insights solution formerly known as Entity Analytics Solution (EAS).  With a new base of customers in which to up-sell software and services, IBM looks well positioned to take on SAS and other behemoth players in the fraud analytics business.  Or are they?

I don’t expect SAS to sit on its hands.  They never do.  Although more traditionally thought of as a NIH shop, I would expect some rapid bulking up on their part.  And what of HP?  The acquisition of Autonomy was interesting to say the least.  I find it hard to believe they are going to stop there.  Even BAE Systems is ready with their recent purchase of Detica/Norkom and the Netreveal platform.

In the meantime, startups such as Palantir Technologies and Infoglide Software continue to make major strides in building our respective next-gen technologies and customer bases. I am particularly proud of our Identity Resolution Engine product and MinorMonitor offerings.  The former provides cross database single-request fuzzy searching, social link discovery, anonymous resolution for data privacy and real time red flag analytics for commercial and government clients.  MinorMonitor is our free web tool that – using the same core technology used to keep terrorists off of airplanes - alerts parents on what their children are being exposed to on Facebook.

The possibilities are endless heading into the fourth quarter.  What’s going to happen next?  I’m not sure.  I expect that other shoe to drop sooner rather than later, though.

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By Doug Wood - Infoglide SVP of Sales

“There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.” - President George W. Bush

Notwithstanding the former president’s butchering of the expression, the point remains valid.  Anyone – any organization – can be fooled once.  A fraudster, or group of fraudsters, can take aim at an organization and score tens of thousands or more in ill-begotten gains.  It happens every day as a result of business’ desire to provide good customers with fast, easy access to the goods and services they want.  If they exploit that privilege – shame on them.

If, however, you don’t have systems in place that catch them trying to fool you twice – then shame on you.

Fighting fraud has always been a challenge.  As a result, technology vendors and consultants have flooded the market with tools that aim to help organizations predict fraud through behavioral analytics.  If a customer performs transactions outside of established norms, that transaction is red-flagged through this type of technology.

The complementary fraud technology is identity resolution and entity link analysis.  By focusing more on the ‘who’ of fraud, an identity resolution engine helps organizations understand who’s who… and who knows whom… within their disparate data stores.  Is the “Doug Wood” in a company’s credit application file the same as the “G. Douglas Woods” in the case management system, for example?  You might want to know that.  He fooled you once, so shame on him. 

By proactively comparing all of the attributes associated with one entity to those in a variety of internal and third party ‘negative’ lists, identity resolution and entity link analysis technology ensures that the fraudster can’t fool you again. 

Infoglide’s Identity Resolution Engine (IRE) provides companies with four strong cores of functionality:

1. Cross Database Identity Resolution allows single-request searching into multiple databases without the need to move or clean the data.  It eliminates time and effort in triaging fraud cases, and allows analysts to focus on the high-return cases. 
2. Social Link Discovery looks at non-obvious relationships between individuals across databases.  By understanding, for example, that a loan applicant shares an address with the loans officer, and also shares a telephone number with a known fraudster, a company can gain immediate insight into the risks associated with that transaction.
3.  Anonymous Resolution for Data Privacy allows organizations to productively search into restricted databases without violating international data privacy laws.  The analyst can understand if a match was ‘likely’ found in the restricted data, without ever seeing or retrieving the actual results.
4. Real Time Red Flag Analysis is the proactive, fool-me-twice implementation of the technology that looks at incoming transaction and compares them to internal and third party databases to understand possible identity matches and non obvious relationships.  If one is found, the software triggers an instant alert.

As an organization, you’re going to get burned by fraudsters from time to time.  Ensuring that you don’t get fooled again, however, requires a robust examination of the incoming data against all relevant ‘negative’ data sources.  The fraudsters are stopped in their tracks and head for an easier target.   

And there’s no shame in that.  

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By Doug Wood - Infoglide SVP of Sales

Government and commercial organizations are under increasing pressure to more effectively identify and unravel threats before they happen.  Predictive analytics tools have traditionally been deployed in hopes of isolating transactional behaviors that may point to a risk of loss.  The market is well served with these systems, yet institutional fraud seems more prevalent than ever.  Lumping in good customers with bad ones simply because they coincidentally perform similar types of transactions?  Not smart.

As a result, organizations are turning to identity resolution technology that drills down into the entities and associated relationships with a high degree of confidence.  In essence, technology that points to ‘who’ instead of simply ‘what’.  Identity resolution engines help organizations transfer from a pattern-centric to an entity-centric fraud analytic model.

So, how can analysts reconcile the massive amount of related data that exists in bits and pieces across dozens or hundreds of disparate databases?  How can they ‘connect the digital dots’ between individuals and other entities represented across so many data sources?  Key to understanding identities is the ability to perform social link discovery to determine not just ‘who’s who’… but also ‘who knows whom’.

Data warehouses and data mining tools have been used in the past to try and solve this challenge; however they require the data to be aggregated, standardized or otherwise deteriorated in order to be mined.  That’s like a CSI investigator tidying up the crime scene ahead of time, so she can more easily look for evidence.  Infoglide Software Corporation’s Identity Resolution Engine™ (IRE) looks at the evidence in all its’ gore and imperfections to present the analyst with a clear and concise view of the individuals who would commit fraud.

Gartner Group – in their 2009 Hype Cycle for Master Data Management report – suggested that “entity resolution and analysis was previously an obscure technology that has come to the forefront as a result of world events and market forces where it is used to identify identities and networks of identities who are attempting to hide their relationships to each other.”

Scott Schumacher, a government security and technology expert and former chief scientist at Initiate Systems (now IBM’s InfoSphere Identity Insight), may put it best when he writes “By identifying and managing relationships between persons of interest and other individuals or objects, (id)entity resolution delivers a more comprehensive view of people, places or things and their activity.”

By significantly mitigating the signal-to-noise challenge faced by fraud and crime analysts, organizations can be more proactive in identifying and preventing unwanted behaviors.  That’s precisely what an identity resolution engine does.

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By Doug Wood - Infoglide SVP of Sales

The word ‘triage’ tends to bring to mind the settings of a hospital emergency room.  Doctors and nurses try to examine the patient data quickly to ensure that patients with the most urgent needs are treated first.  This same concept holds true for insurance. Understanding which claims need further examination is a daily struggle that most P&C insurers deal with.

The Federal Bureau of Investigation estimates that the total cost of insurance fraud (excluding health care) exceeds $40 billion per year. That means insurance fraud costs the average U.S. family between $400 and $700 annually in the form of increased premiums.  Some call this the ‘fraud tax’.

A central component of a successful claim triage program is the ability to quickly and correctly identify a suspicious claim. These technologies trigger alerts when claims fall outside of normal patterns. The market is well served with competing technologies that provide rules-based predictive and behavioral analytics.

 With predictive analytics, fraudulent claims tend to slip through the cracks if the fraudster is careful not to trigger an alert by doing anything that would look suspicious.  Fraud is a chameleon, after all, and it thrives when allowed to blend into the background patterns.

A key new tool has emerged over the past few years which allows insurers to focus on the ‘who’ as much as the ‘what’. Identity resolution engines look at all of the attributes of the people, places and things involved in a claim and compare them to the goldmine of data already sitting behind the insurer’s firewall.  Accounting for variations in names, addresses, dates and a host of other attributes, identity resolution engines look at possible identity matches across data silos, while simultaneously discovering hidden social links between individuals.  For example, does the witness in Claim A share an address with someone currently being investigated by SIU in Claim B?  Do they have similar names or phone numbers?  Is there a fraud ring at work here?

Exposing suspicious claims based upon this robust analysis of the people involved is a sure-fire way to expose the chameleon and reduce fraud costs dramatically.

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Over the past few months, Infoglide Software Corporation - the leading provider of identity resolution and entity analytics technology for fraud and investigations - commissioned a survey to discover the biggest technology challenges facing banks in preventing and investigating fraud.

The survey was conducted with US-based banking institutions having over $4BN in assets.  Of note is that 30% of the respondents had international operations outside of the US.  The respondents included VPs of Compliance and Risk Management, directors of AML, Risk Applications/Fraud Control and managers of Fraud Investigation, Security, BSA and Loss Prevention.

The results of the survey are currently being compiled for general release, but it was extremely interesting to learn that the key challenges of fraud investigations include:

1.       the inability to access data due to privacy concerns

2.       a lack of real-time high performance data searching engine

3.       and an inability to cross-reference and discover relationships between suspicious entities in different databases.  

For regular readers of this blog, it comes as no surprise that identity resolution and entity analytics technology provides a solution to those challenges.  An identity resolution engine glides across the different data within (or perhaps even external to) a bank’s infrastructure, delivering a view of possible identity matches and non-obvious relationships or hidden links between those identities… despite variations in attributes and/or deliberate attempts to deceive.

Large banks need to know who’s who… and who’s working with who.  A true identity resolution engine is the right way for them to find out.

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[Post from Infoglide] Big Oil and Big Data

“In ‘Mining the Tar Sands of Big Data’, Matthew Driscoll and Roger Ehrenberg draw an apt parallel between the earth’s vast oil reserves and big data: until recently it wasn’t economically and technically feasible to mine these resources efficiently. In both cases, that’s changing.”

Hattiesburg American: Scammers get away with $60 billion

“It’s obvious that Medicare’s and Medicaid’s default button is set to ‘pay the claim’ instead of seeking more complete verification that the patient needed the benefit or actually received it. There is no other way people could rip off the agencies for so much money - like the three brothers from Miami suspected of fraud for $119 million worth of billing for HIV drugs before reportedly fleeing to Cuba.”

KSAZ: Inside the Arizona Counter-Terrorism Center

“‘Terrorism is a threat to Arizona as much or more than many states because of our size, and critical industries we have here.’ Roughly 200 people work there, including FBI agents, Homeland Security agents, and police officers from different departments around Arizona. They analyze tips and track down leads, anything having to do with potential terrorist activity.”

O’Reilly Radar: Will data be too cheap to meter?

“When I explain to people why the Big Data movement is important — why it’s a real change instead of a fad — I point to price as the fundamental difference between the old and new worlds. Until a few years ago, the state of the art for doing meaningful analysis of multi-gigabyte data sets was the data warehouse. These custom systems were very capable, but could easily cost millions of dollars. Today I can hire a hundred machine Hadoop cluster from Amazon for just $10 an hour, and process thousands of gigabytes a day.”

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By the Infoglide Software team

Financial Fraud Law: SEC Brings Expert Network Insider Trading Charges

“The Securities and Exchange Commission has charged that six expert network consultants and employees illegally tipped hedge funds and other investors to generate nearly $6 million in illicit gains… The SEC alleged that four technology company employees, while moonlighting as consultants or ‘experts’ to Primary Global Research LLC (’PGR’) without the knowledge of their employers, abused their access to inside information about such technology companies as AMD, Apple, Dell, Flextronics, and Marvell. The consultants received hundreds of thousands of dollars in purported consulting fees from PGR for sharing the inside information with PGR employees and clients, according to the SEC.”

ksnt.com: Fraud Insurance Claims on Vehicles

“Clark said people have come up with clever ways to file fraud claims by staging accidents where everyone in the accident is part of it and they try to get some sort of disability payment.”

SFGate: Medicare fraud has its own most-wanted list

“Topping the list are Miami brothers Carlos, Luis and Jose Benitez. Owners of a string of medical clinics, they allegedly scammed Medicare out of $119 million by billing for costly HIV drugs that patients never received or did not need. Authorities say they bought hotels, helicopters and boats before fleeing to Cuba.”

Business Day: Employee fraud ‘is on the rise’ with executives leading the way

“Companies worldwide have seen an increase in fraud due to ineffective internal controls, according to a report issued by Deloitte yesterday… a significant percentage of companies (51%) recognised they did not have sufficient numbers of trained staff to provide effective assurance on fraud risk in their organisations, with smaller businesses finding themselves even more constrained.”

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By Mike Betron, Infoglide Software Director of Marketing

In “Mining the Tar Sands of Big Data”, Matthew Driscoll and Roger Ehrenberg draw an apt parallel between the earth’s vast oil reserves and big data: until recently it wasn’t economically and technically feasible to mine these resources efficiently. In both cases, that’s changing.

The authors trace the growth in the amount of data generated to “advances in three principal areas: sensor networks, cloud computing, and machine learning.” Both physical (e.g., RFID) and software (e.g., tweets) sensors exist, and multiple forms are being deployed in products and processes each day, thus generating a tsunami of data that grows exponentially each year.

In fact, the growth in big data is even affecting the consumption of energy:

Just as these devices have multiplied, so have the data centers that they communicate with. Housed in climate-controlled warehouses, they consume an estimated 2 percent — and represent the fastest growing segment — of the United States energy budget.

We’ve covered and written about the impact and potential of cloud computing here before. By treating computing resources as a utility served up “by the drink”, cloud computing is another enabler of today’s spectacular increase in data generation.

Machine learning is the third promising factor listed by the authors that is related to the big data explosion:

Its algorithms lie at the heart of spam filters, self-driving cars, and movie recommendation systems, including one to which Netflix awarded its million-dollar prize to in 2009. While data storage and distributed computing technologies are being commoditized, machine learning is increasingly a source of competitive advantage among data-driven firms.

Those who want to exploit the availability of big data have another powerful tool at their disposal – entity resolution. The ability to search across multiple databases with disparate forms residing in different locations can tame large amounts of data very quickly, efficiently resolving multiple entities into one and finding hidden connections without human intervention in many application areas, including detecting financial fraud.

By exploiting advancing technologies like entity resolution, systems can give organizations a distinct competitive advantage over those who lag in technology adoption.

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By the Infoglide Software Team

Proactive Investors UK: Westminster Group secures distribution rights for ID fraud detection software in UK and Middle East

Westminster Group PLC (LON:WSG) said it has secured distribution rights in the UK and the Middle East for the identity fraud detection software of Texas-based Infoglide Software. The commercial details of the deal were not disclosed. Westminster expects the product to be popular with national security agencies across the Middle East in particular. Infoglide’s identity resolution technology searches, matches and links entities across multiple, disparate data sources using over 50 algorithms.”

WSJ: Confidentiality Cloaks Medicare Abuse

“Dr. Wayne, a 50-year-old osteopath, denies abusing the system and hasn’t been accused of wrongdoing by authorities. He says his regimen ‘does wonders’ if used correctly. He adds that he gave physical therapy to ‘patients who needed it, with appropriate diagnoses, and I should get paid for it.’ Medicare administrators apparently felt otherwise. In 2009 he says he was placed on heightened scrutiny and eventually sold his business. But not until he had received more than $2.6 million from Medicare between 2007 and 2009, according to the person familiar with the matter.”

GigaOm: Mining the Tar Sands of Big Data

“Unlike oil reserves, data is an abundant resource on our wired planet. Though much of it is noise, at scale and with the right mining algorithms, this data can yield information that can predict traffic jams, entertainment trends, even flu outbreaks. These are hints of the promise of big data, which will mature in the coming decade, driven by advances in three principal areas: sensor networks, cloud computing, and machine learning.”

Criminal Justice Online: West Haven Woman Admits Role in Mortgage Fraud Scheme

“Specifically, on October 1, 2009, MARTINEAU purchased a residence at 211 Lloyd Street in New Haven after working with others to obtain an FHA-insured loan to buy the house at the fraudulently inflated price of $160,000. The loan package for this transaction included false information about the MARTINEAU’s employment, assets and liabilities, and MARTINEAU’s intention to occupy the property as her principal residence. The loan application also was supported by false documentation, including earning statements and fraudulent bank records.”

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By the Infoglide Software Team

CNN: Lottery officials: Rightful winners of ‘03 jackpot getting paid

“The buyer redeemed the ticket later at the outlet in Burlington and wasn’t told that he won a free ticket, investigators determined, according to the CBC. That ticket went on to win a $12.5 million jackpot. It was claimed by Kathleen Chung, sister and daughter of men who worked at the outlet.”

O’Reilly Radar: Will data warehousing survive the advent of big data?

“The current hype around ‘big data‘ has caused some analysts and vendors to declare the death of data warehousing, and in some cases, the demise even of the relational database. A prerequisite to discussing these claims is to understand and clearly define the term ‘big data.’ However, it’s a fairly nebulous concept.”

Healthlaw Insights: Whistleblower Suits are Rewarding and So is Fraud Recovery

“In addition, the Medicare Fraud Strike Force has been extended to seven cities. Using advanced data analysis techniques to identify high billing levels in healthcare fraud hot spots, the interagency teams can target emerging or migrating schemes along with chronic fraud by criminals masquerading as healthcare providers or suppliers.”

ClaimsJournal.com: Florida Businessman Charged with Workers’ Compensation Fraud

“Florida CFO Jeff Atwater announced the arrest of David Rodriguez-Socarras, who officials allege used a ’shell’ company and fictitious name in order to cash nearly $3 million in payroll checks through a money service business to avoid workers’ compensation premiums and payroll taxes.”

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