The South African government already faces substantial identity fraud problems. Electronic government (e-government) - already big in Europe - will help crack down on this. But moving to an e-government platform could create problems of its own.
The good news, however, is that business intelligence software can be used successfully for fraud detection and prevention in an e-government environment.
"One of the largest growing crimes worldwide is the theft of personal identities," says Bill Hoggarth, managing director of SAS Institute, the leader in business intelligence.
"Identity theft is a simple crime. The only information required is a name, identity number, credit card information, or other personal information. The data is taken without the owner's knowledge either in the form of stolen or discarded papers or information illegally acquired online."
People from all walks of life and from all over the world are falling victim to identity theft.
In SA already this year, several people have been arrested for crimes involving false identities. Six Eastern Cape government officials were arrested for stealing pension money and cheques using false documentation and ID books; three Umlazi teachers were arrested in connection with fraud totalling R2.9 million after diverting the salaries of more than 400 teachers into bank accounts they set up; and the director of the Home Affairs office in Johannesburg was arrested for allegedly helping illegal aliens get valid documents.
Famous victims of identity fraud include Steven Spielberg, George Soros and former US presidential candidate Ross Perot. In the US, the FBI has hailed identity fraud as the fastest growing white-collar crime.
The Aberdeen Group describes identity theft as "the $24 billion problem" in its 2003 IT Outlook report.
"The problem of identity theft will escalate in 2003. Total economic losses to consumers, business, merchants, credit issuers and the financial industry are expected to increase approximately three-fold in 2003, to $24 billion. This compares with $8.75 billion in losses due to identity theft during 2002," according to the report.
The theft of personal identities is also a growing problem in Europe. In the UK alone incidents rose by 55% in the first three months of 2002, to 10 057 cases - the fastest growing category of fraud.
"SA is making progress on the road to e-government," says Hoggarth. "As well as the many benefits of offering public services online, however, moving to an e-government footing can create data protection problems."
For example, if citizens are filling in forms relating to the registration of a new car or company, they will need to provide a level of personal information, which - if it fell into the wrong hands - could be used to create a false identity, adding to SA's fraud woes.
Technology can play a significant role in fraud prevention and detection. Fraudsters rely on the transactions they carry out on - for example, a credit card in your name - looking normal. This is fine as long as they can control their greed. However, even the most careful cracker's trails can now be traced by using analytical technology.
SAS is the leader in fraud detection and prevention software. SAS's fraud detection solution works on the basis of forensic data mining - analysing millions of pieces of data to formulate patterns for suspicious behaviour that can be used to detect and prevent future incidents.
For example, data analysis allows banks to carry out 'velocity checks', where they can study the time and distance between transactions and question whether or not the transactions have been made by the same customer. Common purchase points can also be uncovered - is there a business providing a wide range of information about this credit card, such as a frequently visited restaurant?
"SAS's fraud detection solution enables companies to identify and deter any form of fraudulent activity," says Hoggarth. An integrated part of the SAS solution for CRM identifies factors that are difficult to detect manually, leading to reduced fraud and increased profitability."
SAS's Fraud Detection Solution
Fraud can take many guises such as trading fraud, money laundering, credit card fraud, and identity theft. Fraud has always been a risk to businesses but it is becoming infinitely easier to perpetrate fraud, as money is no longer pieces of paper but bytes of data. Fraud detection is therefore crucial to businesses to stay one step ahead of the perpetrators. It can be defined as the process of detecting and understanding fraudulent actions in order to take corrective measures before, during, or after fraudulent activity, thus reducing and, where possible, eliminating losses associated with fraud.
SAS's fraud detection solution utilises a combination of data mining, data warehousing and exception reporting to allow IT departments to:
* Identify suspicious activity.
* Track intrusion occurrences.
* Set appropriate sensitivity levels for online intrusion detection systems.
* Automate the offline intrusion detection process.
* SAS Fraud Detection Solution: components and capabilities.
In order to solve these problems, the first step is to detect intrusions and formulate patterns for suspicious behaviour that can be used to detect future incidents - intelligent prevention is always better than a cure. Intrusion detection systems collect information from various vantage points within a computer system or network and analyse that information for symptoms of system breaches.
SAS software solutions help customers to maximise the potential of their data, and consolidate the individual sources of data contained in their information systems into an integrated data warehouse that can then be used to provide a complete view of the customer or user.
The SAS solution allows organisations to carry out data mining techniques to identify and model suspicious conversations and addresses and illuminate areas of fraudulent behaviour. This data enables organisations not only to uncover patterns and occurrence of suspicious activity but also to identify potential areas of weaknesses across the enterprise infrastructure.
Through the continual improvement of anti-fraud technologies and the tracking of intrusive events using data mining techniques, the fraud prevention teams within SAS's customers are able to build predictive models that track intrusive behaviour over time and enable them to develop models based on normal usage-trends.
Based on SAS's prediction and analysis software, the fraud detection solution includes:
* Fraud exploration: Companies can explore historical data to gain a better understanding of past fraudulent activities and transactions, defining the reasons for fraud. Combined with their expertise, this leads to more informed fraud prevention decisions.
* Fraud prediction: Organisations can predict whether a transaction is fraudulent or not, or deduce the probability of fraud, which ultimately leads to a reduction in fraudulent activity.
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