Telephony data is your secret weapon against fraud

As fraudsters shift between contact channels, real-time phone-number intelligence gives insurers a decisive edge in detecting fraud before it escalates, says Smartnumbers’ Jamie Melling.

Insurance fraud is difficult to track. Fraudsters today switch easily between web, mobile apps and contact centre, exploiting whichever route offers the least resistance to make bogus policy applications and claims.

This creates a difficult challenge for insurers’ fraud teams, as they struggle to identify suspicious activity earlier, before losses occur and investigations escalate.

However, one area of focus for fraud prevention that is bringing increasing value for Smartnumbers customers is the data from calls to the contact centre. Historically viewed as operational information, telephony interactions are emerging as a powerful source of actionable fraud intelligence.

Calls provide actionable fraud intelligence

Fraudsters frequently interact with contact centres, even when the fraudulent activity ultimately completes elsewhere. They use calls to bypass tighter digital controls and gather policyholder information, manipulate agents into amending policy details or initiate payments. These calls leave signals that can be used to catch them.

The caller’s number and other associated data can enable insurers to link fraud investigations across customer channels, policies, claims and business lines. A single phone number may connect multiple applications, identities or fraud events that would otherwise appear unrelated.

Fraudsters often follow the same communication patterns across multiple attacks and, while ‘customer’ identities, payment details or devices may change, phone numbers frequently remain the same. This makes keeping track of calls from specific phone numbers particularly important.

When insurers – or any kind of company for that matter – treat phone numbers as risk identifiers, their fraud teams can surface patterns of suspicious behaviour that are otherwise difficult to detect. And it enables them to move away from investigating isolated incidents and towards building a connected picture of organised activity.

A single phone number may connect multiple applications, identities or fraud events that would otherwise appear unrelated.

Jamie Melling, Smartnumbers

Unmasking hidden numbers

The telephony channel remains attractive to fraudsters because organisations often lack a way to carry out security checks on incoming calls in real time. Perpetrators take advantage by withholding or spoofing their caller ID to operate under the radar and avoid detection.

But when insurers can identify the true number behind incoming calls in real time, which is what Smartnumbers enables, they gain access to an important intelligence opportunity.

Once uncovered, phone numbers can be cross-checked against the insurer’s internal denylists, details from previous fraud investigations, and intelligence made available in the platform by other Smartnumbers customers.

Access to this kind of shared intelligence is particularly useful when the data comes from companies that span multiple sectors.

Analysis of the caller data from one insurer showed that around a third of the fraud they identify originates from phone numbers first flagged as suspicious by banks, for example. In other words, a number identified during a banking fraud investigation may later appear in insurance policy applications, claims activity or contact centre interactions. Without access to shared intelligence, those connections would be missed.

Integrating intelligence into fraud operations

The true value of telephony intelligence becomes clear when it is shared with wider fraud operations teams and integrated into processes across the business.

Fraud investigators gain the ability to follow the fraudster trail across policies, claims, product lines and organisations, instead of operating within isolated systems or disconnected investigations. And insurers can identify repeat actors, uncover linked activity and detect suspicious behaviour earlier in the lifecycle.

The true value of telephony intelligence becomes clear when it is shared with wider fraud operations teams and integrated into processes across the business.

Ghost broking activity provides a good example of how this works in practice. Fraudsters posing as legitimate insurance intermediaries will set up several bogus policies across multiple insurers, frequently moving between online and telephony channels as they do so. Viewed individually, their interactions with the insurer may appear legitimate. But when connected across multiple policies and claims via a single phone number, patterns emerge that expose repeat actors and linked behaviour.

When this intelligence is combined with wider fraud management data, insurers can build profiles on repeat offenders and identify organised fraud rings. Fraud teams can act quickly and collaboratively, which is critical to detecting fraudulent activity earlier.

Emerging vulnerabilities with increased automation

As insurers, like fraudsters, increasingly turn to technology to automate processes, they must also prepare for a new generation of fraud risks.

Smartnumbers’ experience working with the banking sector, which is arguably further ahead in its automation journey, shows that telephony journeys using Interactive Voice Response (IVR) systems are attractive targets for organised fraud, for example.

For fraudsters, automated attacks are fast, scalable and inexpensive to execute. They use bots to navigate IVR call flows and gather information and test credentials for use in downstream fraud activity.

Insurers also face the growing threat of synthetic identity fraud, one of the fastest-growing and hardest-to-detect forms of identity theft. Fraudsters combine fake information with genuine personal data to create entirely fictitious identities. These are then used to obtain insurance policies and support wider organised fraud activity.

In both cases, the ability to check incoming calls at scale and flag suspicious numbers in real time provides an essential line of defence and insight for fraud teams.

It’s time to look at telephony interactions in a different light.

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