Fraud is a $400 billion problem that costs each consumer nearly $1,500 per year. Much of this fraud is collusion, or “insider threat,” which frequently goes undetected because relationships exist within a company that are difficult, if not impossible, for humans to recognize. Today, technology is helping companies large and small cut fraud in many different ways. Major employers in gaming, healthcare, government and almost any other industry have access to technology that can address the significant and ongoing security, fraud and intelligence challenges that cost them billions of dollars a year.
Consider this example: A small gaming company with less than 2,000 employees caught four employees engaging in fraud that would have otherwise gone undetected. Here’s what happened: Surveillance noticed a patron cheating the roulette table by using a “past-posting routine”. This technique involves placing a bet on a number after the roulette ball has already fallen. It is typically carried out with a trained distraction team that directs the dealer’s attention away from the illegal bet. However, surveillance personnel caught the crime on camera. They called security and the customer was apprehended. The dealer claimed to be ignorant of the cheating at her table.
The cheater then provided his name, address and phone number for the arrest report. The last name was different from the dealer’s, his address was different from the dealer’s – but his phone number was the same. This small detail would normally go unnoticed. However, new state-of-the-art technology running in the computer room detected that the arrested cheater had the same phone number provided by the dealer in her employment file. This technology, called Non-Obvious Relationship Awareness, or NORA, beeped to alert security … and the dealer was also arrested in connection with the scam.
A Nevada-based company, Digital Data Development (DDD), created NORA to give companies a proactive way to protect themselves against collusion. The program quickly cross-references large databases, identifying non-obvious relationships among and between individuals and companies. This technology uses cutting-edge techniques including an Application Service Provider model and XML. NORA is the result of 18 years of researching pattern recognition in large amounts of data. The program is built on the theory that detecting patterns is the key to fraud prevention.
Using NORA, each employee record is passed through a series of data-quality and data-enhancement processes. Once cleaned and enhanced, records are evaluated against each other for relationships. Relationships meeting pre-defined criteria are presented to users electronically as NORA Intelligence Reports. This technology can be implemented in near real-time configurations, delivering collusion alerts within seconds of detection.
Examples of potentially harmful relationships that NORA can immediately identify within employee databases include a supervisor who has the same address as a subordinate, or a current employee with the same phone number as an employee who was fired under bad circumstances. These incidences represent relationships that could potentially lead to fraud. NORA is ideal for businesses that deal in large amounts of cash, like restaurants or casinos. With so much cash changing hands, as in the above example, it’s no surprise that opportunists engage in endless scams to steal from the hospitality industry.
Jim Litchko, co-founder of Digital Data Development, has encountered extensive interest and demand from federal agencies attempting to mitigate insider threats. “The capability and maturity of DDD’s collusion technology is drawing significant interest from government agencies,” Litchko said. “We are the first organization to bring forward a capability that cannot be duplicated by human effort—an army of analysts working for a year could not match the results we achieve in hours. The scalability and performance characteristics of NORA are so impressive, we are positioned to solve some of the most demanding problems facing our clients.”
