Commerce has become digital. All sectors have become digital, and that includes fraud as well! Big Data and data analysis are powerful weapons for fighting financial abuse, insurance fraud or false claims. Let’s find out why.
The financial impact of fraud
Fraud is a recurring problem and one which weighs heavily on the finances of large companies. In the financial sector and the health sector, but also within official organisations, the quantities of data being handled can conceal fraud without meaning to. The immense quantity of data to process and the requirements in terms of responsiveness do not always make thorough checking possible. Fortunately, the tools which are emerging are going to provide something new.
- In France, tax evasion costs the state between €60 and €80 billion per year[i] according to the figures in the Solidaires-Finances publiques trade union’s report;
- The fraud rate on bank card payments is 0.08% of the amount of the transactions completed, or €469.9 million, according to figures from the French Observatory for card payment security[ii];
- For online commerce, the fraud rate on payments is 0.29% (Fevad’s figures[iii]).
- Fraud detected by social security organisations reached €636 million in 2013 in France (more than 174 million at the expense of state health cover) according to the report by the French National delegation for the fight against fraud (DNLF)[iv];
- Insurance fraud costs an estimated total of 8 – 12 billion per year.
The advantages of digital for companies (efficiency, rapidity, accessibility) are also attractive to criminals. Making a false claim, forgetting certain information or taking advantage of the system are becoming easy to do. How can we fight against this?
Real-time data analysis – the modern solution to digital fraud
Large companies but also some states have taken an interest in Big Data to use it to fight fraud. This includes Belgium, which achieved a real master-stroke in the fight against VAT fraud. Through Big Data combined with a tool which monitors inconsistencies, this type of fraud was reduced by 80%. Belgium has saved the equivalent of €1 billion per year with this system, and has done so since 2001[v]! Ways of cross-referencing tax data are also being considered in Italy or France, but issues about protecting privacy are holding up their roll-out.
In the business world, and in particular banking/insurance, the counter-attack is being organised:
- by monitoring behavioural data it is possible to detect suspicious behaviour (multiple views of pages, time spent on a contract’s guarantees);
- faced with potentially suspicious activities, it is in theory possible to protect oneself and thus avoid an attack;
- in terms of payments, it is possible to monitor dysfunctions or unusual behaviour when reimbursements are paid. This is the case for ProBTP – the Construction and Public Works health and personal insurance coverage group – which detected that 9% of optical and 14% of dental care claims were fraudulent (total losses are estimated to be €14 million[vi]) by putting a solution in place.
Big Data changes the overall approach of the fight against fraud. Alongside the traditional tools (complaints, reports, fraud history), Big Data makes it possible to go through the data and find inconsistencies which are sometimes minimal and cannot be detected by a human going through it quickly. Using the data in this way makes it possible to identify small clues and correlate them with attempts to commit fraud or fraud which has already taken place.
Big Brother or Big Data?
To discover the challenges of big data and the possibilities it offers, join us on Wednesday 24 June at the Palais Brongniart in Paris to delve into some real cases and for feedback and discussions.