Identity Resolution Daily

Data Warehouse Knowledge Base: Identity Resolution Vs Data Profiling

“Identity Resolution is a lot different from Data Profiling. In data profiling you are looking at data anomolies, consitancies, potential issues, business rules (known and unknown), etc. With Identity Resolution you are looking connections between people/places/businesses. Who is who, who are they, who have they been, who are they connected to, who have they been connected to, when, matching specific codes (social security numbers, phone numbers - cell & land lines), etc.”

wcco.com: I-TEAM: E-Fencing And Organized Retail Crime

“Casey Kespohl, a WCCO employee, got a good deal on some Nike Air Jordon shoes from an eBay power seller. They came new in a box. Kespohl doesn’t know if they were stolen but like most online auction shoppers, hearing about e-fencing was a revelation. ‘It was a bit of an eye opener for me,’ Kespohl said, to learn about the even the possibility that the shoes could have been stolen. ‘To find out, wow, there’s organized crime that is basically then using this as a facilitator of that to sell products was sort of alarming.’ He’d now be more inclined to shop from someone who could prove they are a credible seller. That’s the type of awareness Target is trying raise. Garvis said people should think about who’s getting the money from stolen property, not the fact buyers may have saved a buck.”

USA TODAY: TSA plan to gather more data protested

“The Transportation Security Administration (TSA) wants passengers to give the additional personal information — as well as their full names — so it can do more precise background checks that it says will result in fewer travelers being mistaken for terrorists. Travelers currently must provide only a last name and a first initial.”

WRAL.com: Speeding Motorists, Chatty School Bus Drivers Targeted in New NC Laws

“Lawmakers also created the crime of organized retail theft to combat thieves going after valuable black-market items such as baby food and razor blades. ‘It’s not your basic or typical thieves,’ said Andy Ellen with the North Carolina Retail Merchants Association. They ‘are almost gang-like, going from the city to city, (seeking) certain items that are of high value.’ Prosecutors in many cases could only seek a misdemeanor against shoplifters who were taking a few hundred dollars in goods, Ellen said. Under the new law, a person now could face a felony if there’s signs of premeditation, such as taking goods through an exit door, switching price bar codes or stealing $100 of infant formula.”

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We’ve occasionally dabbled in issues of right or wrong in our posts. When does security go too far? What if well-intentioned loss prevention efforts have the bad effect of turning retail clerks into racial profilers? While companies are in the business of making money, we feel they also have a responsibility to act ethically. Here at Infoglide Software, we’re very proud of all our Inc. 500, Software 500, and Deloitte Technology Fast 500 recognitions, but we’re equally proud of being a finalist for the Samaritan Center Ethics in Business Awards.

While we all know that the gross misdeeds at companies like Enron, Adelphia Communications, and Tyco are wrong, ethical issues come in many shades of gray. One that we’ve seen come up several times recently is not whether a company should commit fraud or crime - to quote Shakespeare, ‘Duh’ - but whether a company should take steps to right wrongs that they didn’t commit. You might think that if they aren’t the offending party then they’re not responsible. But what if a company or organization makes money off the misdeeds of others? Hmm. Let’s look at a couple of recent instances that illustrate this exact dilemma.

Apple and the Case of the Ill-gotten iPods
SanDiegoReader.com recently reported that Apple has the means to know when a stolen iPod is being used to download music on the company’s iTunes web site.

Ferry hopes that Apple’s decision not to track stolen iPods doesn’t have to do with the fact that the more iPods that are stolen, the more iTunes users buy songs and the more victims buy replacement iPods.

Interesting. Most of the comments on the article expressed a desire for Apple to be proactive in helping consumers who have had their iPods stolen. [Note - some comments include strong language]

EBay and the Case of E-fence Straddling
E-fencing is a growing problem for retailers. Individuals and organized retail crime (ORC) rings steal goods and then sell them on eBay and other auction sites. Because of the anonymity and global reach, e-fencing is a relatively safe, profitable way of getting rid of stolen goods. The thing is, because eBay makes money on every transaction, it’s also pretty profitable for them as well. So how hard should eBay work to solve this problem? As you might imagine, retailers and eBay disagree on how much and what eBay should do.

From “Shoplifters taking high-tech road” on denverpost.com:

Retailers responding to a National Retail Federation survey last year estimated that 70 percent of gift cards sold in eBay were fraudulently obtained . . . Mr. LaRocca, the federation’s loss-prevention chief, says the group raised a “big stink” with eBay, which eventually changed its policy. EBay now limits sellers to posting one gift card per week, with a value of no more than $500. When the National Retail Federation scrutinized gift cards sold on eBay on Sept. 14, says Mr. LaRocca, it identified more than a dozen auctions involving sellers who had violated eBay’s policy by listing more than one gift card a week. “Although we have been talking with eBay, the conversations have clearly not been fruitful to date,” says Mr. LaRocca.

Campaign Contributions and the Case of the Funny-money Funds
We recently did a post on campaign finance fraud. Here again, you have a situation where someone can benefit financially from the fraudulent activity of someone else. In this case though, Hilary Clinton’s campaign, which received the bulk of the fraudulently attained money, did refund the donations. What we don’t know is what efforts, if any, are being taken to make sure this sort of thing doesn’t happen again.

It seems like the trend here is for the entities that are benefiting from the crimes of others to either do nothing or present a partial solution to the problem. Identity resolution software, like our Identity Resolution Engine(tm) and IBM’s Entity Analytic Solutions, could provide a total solution to all these problems. But only if the organizations want to solve them.

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Concurring Opinion: Privacy and the 2008 Election

“Polling on issue like privacy is a challenge, which makes interpreting survey results difficult, said privacy law expert Daniel Solove, a professor at George Washington University and author of several privacy-related books, including the newly published ‘The Future of Reputation.’“

PogoWasRight.org: Flawed New Jersey Online Dating Bill Still Seeking Ratification

“The flawed part of the bill comes in the fact that to satisfy the bill’s ‘Criminal Background screening’ all a site has to do is a simple name search via a regularly updated government public records database or a database maintained by a private vendor. Any user of the Internet and social networking or dating sites knows that many users don’t provide their real names. The bill makes no provisions for dating services to check backgrounds via information that like social security numbers and to corroborate the data to be sure the member is who they claim to be.”

Bloomberg.com: U.S. Asked to Exempt Canadian Flights From Watch List Checks

“Already, flights between Canadian cities that cut through U.S. airspace to save time are exempt from the Department of Homeland Security’s planned `Secure Flight Program,’ Canadian Transport Minister Lawrence Cannon said today in a statement. Canada filed a written request for the broader exemption.”

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Retail Technology Blog: Retail Returns Management Systems

“LPInformation Magazine November issue has a very informative article on Returns fraud and how Retailers are using Returns Management Systems to minimize the loss due to fraudulent returns.”

PogoWasRight.org: IS OBAMA THE PRIVACY CANDIDATE?

“The telephone poll of 600 adults, conducted by private research firm The Ponemon Institute, also found that 40 percent of Americans say protection of privacy rights is either important or very important in determining preference for the next presidential election.”

LossPrevention: Profit Protection - A U.K. Spin on Loss Prevention

“Shrinkage is often seen as a store problem, simply because that’s where it manifests itself and is accounted for. However, when you study the shrinkage problem deeply, you see the root cause of the problem can be influenced by almost every department. So having board support to go where we need to go and do what we need to do is invaluable.”

Legal & Medical: Women ‘agreed’ to broken leg in 100,000 damages scam

“Speaking to Legal & Medical a Plymouth City Council spokesperson said: ‘Making a fraudulent insurance claim is a criminal offence and every fraudulent claim met from the Council’s funds means less money going into vital services for local residents.’”

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The Patriot Ledger: MALL MARAUDERS: Retailers struggle to combat increasingly organized shoplifting gangs

“Many retailers have tightened their return policies in recent years after a rise in return fraud in which stolen merchandise is returned without a receipt in exchange for a refund or store credit. The latest Internet-based twist: the emergence of so-called ‘E-fencing’ Web sites that sell stolen merchandise at cut-rate prices. A survey of members by the National Retail Federation put shoplifting losses last year at a record $13.3 billion, up from $13 billion in the previous year. Overall shrinkage, which includes employee theft and vendor fraud, rose 8 percent to $40.5 billion. As a percentage of sales, shrinkage was unchanged at 1.6 percent.”

Hi-Tech-Blog: New Data Mining Techniques Studied

“Most of the information that hinted at possible trouble prior to the 9-11 attacks was buried under massive amounts of data being collected faster than analysts could handle. . . . To prevent such pieces of information from being missed again, researchers at the DHS Science and Technology Directorate are developing ways of viewing such data as a 3D picture where important clues are more easily identified.”

InvestorDaily: Austrac issues AML warning: Call for industry collaboration

“Regulator Austrac has warned the financial services sector that the industry has until December to comply with the first phase of Australia’s anti-money laundering (AML) and counter terrorism laws. From December 12, firms will need to have internal AML compliance programs that verify the identity of customers. Businesses that breach the laws can be fined $11 million, while individuals within the company penalties of up to $2.2 million.”

KansasCity.com: Some funds of U.S. agency end up with groups tied to terrorism, audit finds

“The agency that distributes billions of dollars in American foreign aid cannot ‘reasonably ensure’ that its money does not wind up in terrorist hands, an internal audit has concluded. The U.S. Agency for International Development funded groups with ties to terrorism on at least two occasions, the agency’s inspector general found in an audit. That included approving $180,000 for a Bosnian group whose president was on a ‘watch list’ that barred him from entering America, and $1 million for an aid ‘partner’ who later pleaded guilty to lying to federal agents about his involvement with a disciple of Osama bin Laden.”

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[Post from Infoglide Software] Repeal the Fraud Tax!

“Several recent items in the news highlight the fact that insurance fraud continues to be a drain on society, both in the US and the UK.”

newsday.com: 19 airports fail security test

“‘Our tests clearly demonstrate that a terrorist group, using publicly available information and few resources, could cause severe damage to an airplane … by bringing prohibited improvised explosive device components through security checkpoints,’ said Gregory Kutz, a managing director for the Government Accountability Office. But the nation’s top transportation security official, Edward ‘Kip’ Hawley, downplayed the findings in a tense hearing Thursday, insisting his screeners focused ‘on what might actually take down a plane, as opposed to what could do severe damage. . . . We focus on the piece that could do catastrophic damage,’ Hawley said. ‘The terrorists are very smart. They know what takes a plane down. That’s what we have to stop.’”

CarInsurance.com: Phila. Man Held in Alleged Plan to Bilk Insurers: He is Charged With Filing Phony Claims of Auto Vandalism and Committing Identity Theft.

“Authorities charged Keith Lewis, 41, of the 5400 block of Erdrick Street, with deploying a car and three SUVs — including a 2000 Toyota Camry owned by his girlfriend, who was not charged — to orchestrate the scheme, which began after he provided initial premium payments drawn on a bank account without sufficient money. He then filed claims for minor damage and sought to collect before the insurers realized the initial payments were no good, investigators said. . . . Among the targets of the plan were Pennsylvania’s largest auto insurers, including AIG, Allstate, Geico, Progressive, Safe Auto, Safeco and Unitrin Direct.”

Retail Solutions Online: Loss Prevention: The Centre For Retail Research And Checkpoint Systems Host Web Cast To Present Results Of The First Worldwide Retail Theft Survey

“The Centre for Retail Research in Nottingham, United Kingdom and Checkpoint Systems, Inc. recently announced that they will present the results of the first Global Retail Theft Barometer. The study reveals new facts about actual levels of retail shrinkage and crime in 32 countries around the world, including 25 countries in Western and Central Europe, as well as the U.S., Canada, Australia, India, Japan, Singapore and Thailand.”

Chicago Tribune: Bill takes aim at gaps in airport security

“Only U.S. citizens would be allowed to hold airport jobs that involve access to planes and baggage under proposed federal legislation that an Illinois congressman announced Tuesday. In addition, responsibility for issuing airport employee security badges should be shifted from local authorities to the federal government, U.S. Rep. Mark Kirk (R-Ill.) said in response to recent security problems uncovered at O’Hare International Airport.”

Retail Technology Blog: Biometric system to reduce shrinkage

“Holt Renfrew, one of Canada’s premier high-end fashion and lifestyle shopping retailers, has deployed a fingerprint-based biometrics point-of-sale (POS) system that tracks sales associates’ transactions at cash registers. Deployed in 2001, in its first three months the technology paid for itself in loss prevention, says Hodkin. And no mistake about it, eliminating shrinkage is a big deal to retailers.”

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Several recent items in the news highlight the fact that insurance fraud continues to be a drain on society, both in the US and the UK.

In the UK, Legal and Medical reported that four people had been arrested in an insurance fraud scheme that involved staged car accidents, a common technique.

Allianz insurance alerted Merseyside police about a number of suspicious motor insurance claims in 2005. This led to the arrest of three men and one woman. . . . Detective Inspector Alyson Wilson of Merseyside Police’s Force Operations Unit said: “This is an unscrupulous crime that affects the premiums paid by the public and impacts on the whole of the motor insurance industry.”

We previously linked to an article in the Little Falls Times that had this to report about the financial impact of insurance fraud:

Insurance fraud costs Americans at least $80 billion a year. If this illegal activity were a legitimate industry, its profits would exceed Toyota, IBM, Wal-Mart and Microsoft. If measured by sales, insurance fraud would crush Johnson & Johnson, Proctor & Gamble and Coca-Cola among many more of the Forbes Global 2000.

The article goes on to state that “approximately 25 percent of insurance premium dollars going toward the effects of fraud.” In fact, we estimate that the cost of insurance fraud (plus retail fraud) adds up to over $600 per year for every American household, a number we like to call the “fraud tax“. You can bet that if the guys and gals up in Washington D.C. decided to levy a $600+ tax on every household that people might get a bit upset. Yet the fraud tax is hidden in the cost of premiums and the cost of goods so we don’t even notice it. But, believe us, it’s there, and it’s impacting each and every one of us. I mean, what would you do with an extra $600? That’s almost enough to buy two iPhones.

WSAZ.com recently reported on an insurance fraud case that involved arson.

Two Huntington have pleaded guilty to insurance fraud, arson and other charges. The West Virginia Insurance Commissioner says that 29-year old Richard E. Sturgill and 43-year old Jeffery Maynard, entered the pleas in Wayne Magistrate Court back on October 30. . . . The release says both conspired to burn a vehicle owned by Mr. Sturgill on March 18, 2007 and then filed a false insurance claim for the loss. . . . The Insurance Commissioner added, “Automobile insurance rates are affected by criminal acts such as these and we are committed to investigate and prosecute individuals who try and use insurance as a means of personal profit, while other customers pay for their acts”.

When you add arson to the mix, you’re not only costing people money but you’re also risking lives.

From the Little Falls Times article:

[Frank Henry, special investigations manager for One Beacon Insurance] said. “Staged auto accidents and arson can cause innocent people to be killed or seriously injured. Workers’ compensation costs are encouraging businesses to relocate out of state. Insurance fraud is a crime, a crime punishable by law.”

Another recent article in the UK’s Oldham Advertiser cited a new method that the insurance industry is using. It’s called voice recognition analysis (VRA), and it’s based on military interrogation techniques. The VRA systems detect “stress patterns – such as hesitation or changing of answers – in the voice of callers to indicate whether they might be lying.”

VRA is an innovative approach to insurance fraud and would seem to have significant benefits. But with more and more people filing claims online, insurance companies desperately need a way to analyze data, both structured and unstructured, to find suspicious patterns that might indicate fraud. Identity resolution (or entity resolution and analysis as Gartner terms it) provides this capability along with the ability to apply domain specific rules and automatically feed the results back into business processes.

We need to repeal the fraud tax on every American household. Insurers have a responsibility to their customers to use all reasonable means to address insurance fraud. Mihar Pandya, Allianz Insurance Fraud Manager, states it best:

The industry should be united in its efforts in disrupting this activity. In addition to working with the Insurance Fraud Bureau, the industry must continue to invest in its own fraud management strategies in order to remain effective in countering this threat.

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BusinessWeek: Shoplifters Get Smarter

“Such theft has grown steadily in recent years, merchants and law enforcement officials say. ‘We have witnessed a steady increase in organized retail crime,’ says David Hill, a Montgomery County (Md.) police detective. ‘These groups operate with the training of a paramilitary.’”

blip.tv: ETech 2007 - Jeff Jonas

Jeff Jonas of IBM presents at the Emerging Technology Conference on what IBM calls entity analytics (otherwise known as identity resolution). Gartner recently began calling this category entity resolution and analysis.

silicon.com: Data sharing ‘could sap public confidence’

“Sir David Varney, the Prime Minister’s adviser on public-service transformation, said the nature of the data to be shared between government departments was still under discussion. Varney said: ‘There has to be a lot of careful thought about what data needs to be shared. If names, addresses and national insurance numbers were shared, people would benefit from a more personalised service.’”

YouTube: Buy Your Stuff Back on eBay!

KBTV’s report on buying stolen items on eBay.

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[Post from Infoglide Software] Searching Dirty Data for Dirty Money

“Few would find a problem with large contributions coming to political candidates and committees from a single household. But over $200,000 in contributions since 2004 from a single middle-class household might raise some eyebrows, especially when the head of that household is reportedly a mail carrier.”

YouTube: eFencing Stolen Items On Ebay

CNBC news segment

Austin Business Journal: UT creates global security chair

“The chair, called the Jon Brumley Chair in Global Affairs, will fund programs that study efforts ‘to reconcile technological advances with security needs.’”

National Retail Federation: Return Fraud to Hit $3.7 Billion this Holiday Season, According to NRF Survey

“As retailers across the country gear up for increased holiday sales, they are also bracing for higher returns, some of which will be fraudulent. According to the National Retail Federation’s second annual Return Fraud Survey, loss prevention executives anticipate that nearly nine percent (8.93%) of holiday returns will be fraudulent, up slightly from 8.67 percent last year.”

United States House of Representatives: Testimony of the National Retail Federation By: Joseph LaRocca, Vice President of Loss Prevention

“My name is Joe LaRocca. With over 18 years of experience as a loss prevention professional inside retail companies, I speak from experience about the significant and sweeping change I myself and colleagues of mine in loss prevention (“LP”) have encountered and had to adapt to in order to stay ahead of the bad guys. What used to be a focus of our time and resources on physical crime – property based theft, embezzlement, etc., — have quickly shifted and accelerated into the online world, presenting me and my colleagues with an entirely new, more sophisticated, harder to find, next to impossible to identify or reach culprit – the cyber-criminal.”

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Few would find a problem with large contributions coming to political candidates and committees from a single household. But over $200,000 in contributions since 2004 from a single middle-class household might raise some eyebrows, especially when the head of that household is reportedly a mail carrier.

The Paw family of Daly City, California was highlighted in a Wall Street Journal article. The Paws were noted for their apparent connections with Norman Hsu of New York, a one-time fugitive and major campaign fundraiser. Hsu’s status as a “bundler” meant that he brought big money to campaigns. While all of the details still aren’t clear, it is undeniable that Hsu faces Federal fraud charges for his business dealings and campaign funding activities.

Campaigns are required to report contributions they receive to the Federal Elections Commission (FEC). That data is publicly available through several sources, including public interest groups, political websites, and the FEC itself.

But campaign data is like all data. It suffers from the same problems that we see in industries such as retail, insurance, and banking — it is “noisy”. Variations in formatting and mistakes in typing cause straight “equality” comparisons to fail. And when you can’t count on the data to agree, you can’t make decisions.

Traditional, exact searches of the public sources yield conflicting results that range from variations in the spelling of contributor names and their employers to differing cities. Exact matching yields only a portion of the contributions that were apparently from their household.

You cannot count on common database queries or even “similarity” measures like soundex to reveal matches across variations such as:

• Multipart names, nicknames, and misspellings
• Address abbreviations (e.g., “Parkway” versus “Pkwy.”) and misspellings “6300 Bridgepoint” versus “6300 Bridge Point”)
• City misspellings and miscodings
• Zip code misspellings and formatting (e.g., “78730″ versus “78703″ versus “787303824″)

Advanced similarity search algorithms, however, can resolve most of these inconsistencies.

And in the cases in which field-by-field similarity comparisons fail, all is not lost. Advanced relationship detection and identity resolution techniques can see past inconsistencies and still connect the dots. So contributions attributed to residents of a specific address but related cities can still be resolved to the same individuals. And the connections can be exposed, analyzed, and highlighted.

Here’s a scenario for how identity resolution software might have automatically highlighted the Hsu connection for further scrutiny:

• Similarity search would be applied to group contributions by identical household to find the highest contributors.
• The total for the household would be above average. It would be flagged as a household of interest.
• Relationships of household members to others would be examined.
• Some contributions report variations of “Next Components, Ltd.” as an employer.
• Another person related to “Next Components, Ltd.” is Norman Hsu.
• Hsu repeatedly made contributions to the same committees on the same days as the household.

Identity resolution technology, like that of Infoglide Software’s Identity Resolution Engine™, could have detected this as an interesting pattern warranting further investigation. It cannot unequivocally determine that these patterns indicate that there is criminal behavior involved vs. just an innocent coincidence where two co-workers have similar political leanings. But for organizations and individuals seeking potentially dirty needles in a haystack of dirty data, it could narrow down the search significantly.

All of this is revealed from the data, if enough brute force or hindsight — or the right technology — is brought to bear.

It does not take sophisticated technology to tell some parts of the story, however. When the scandal broke, campaigns had to field uncomfortable questions, return hundreds of thousands of dollars in contributions, and find new contributors to replace the old.

Too bad the campaigns didn’t use technology to help them “know their contributors” and avoid a black eye. But others can learn from their woes and protect their organizations from similar problems.

Other industries faces analogous, if not identical, issues.

• Retailers unwittingly hire bad employees with connections to known bad check writers, hand cash-equivalent refunds to shoplifters, and overlook organized retail crime (ORC) rings in their midst.
• Insurers are defrauded by individuals who game their application process or collude to cash in on fraudulent claims.
• Bankers are challenged with knowing a sea of customers well enough to avoid painful consequences and public embarrassment related to Bank Secrecy Act (BSA) and other compliance regulations.

It’s a good thing that the solution to these problems exists. Is your organization using it? Or is it waiting for an Hsu-sized black eye before it takes action?

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