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Nancy Feig
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International Fraud Could Be Slowed By Data Sharing, Study Shows

Organizations share data to stem tide of cross-border fraud.

Fraud experts are calling for greater global cooperation in the fight against fraud, according to a recent bank fraud study from First Data Corp (Greenwood Village, Colo.). The respondents, who hailed from 52 banks across Europe, Asia and the Middle East, acknowledge, however, that there are significant barriers that stand in the way of such collaboration.

Ninety-six percent of the respondents to First Data's study believe that fraud is perpetrated on a global stage, learned and passed from one part of the world to another. According to First Data, this means that the industry has the opportunity to anticipate how those involved in fraud will strike next and take preventative action in advance of a potential attack.

"The fraud experts participating in our study clearly recognize that fraud is a global phenomenon demanding global response," says Jackie Barwell, director of fraud management, Europe, Middle East and Africa, First Data International. "At the same time, it is a sensitive subject for banks concerned with reputation, competitiveness and profitability. Banks acknowledge the importance of working together and with other agencies to combat fraud, but they are not yet sharing data at a level that will make a real difference to the struggle."

According to one study respondent, "Organizations are secretive of fraud losses and that inhibits our ability to work together."

"The sharing of intelligence is key to being able to take advantage of the predictability of fraud," First Data's Barwell continues. "Banks are sitting on valuable data that, if analyzed innovatively, could provide fraud intelligence worth sharing. One major bank has shown that if their internal client databases across business lines and geographies are analyzed using sophisticated link analysis tools, spurious networks of accounts can be uncovered and, when fully investigated, could uncover organized networks of first-party fraud accounts."

Barwell adds that several U.S. banks have expressed interest in taking the "quantum leap" to true data sharing.

The International Language of Fraud

"In the last eight to 10 years, fraud has really gone international," says Steve Baker, director of the Midwest region of the Federal Trade Commission (FTC). The FTC maintains a Consumer Sentinel database that includes more than 3.5 million consumer fraud complaints and is accessible to more than 3,000 law enforcement agencies internationally. In 2006, 22 percent of the reported fraud was cross border.

Banks should encourage consumers to complain when they have been the victim of fraud, Baker says, noting that only 8 percent of victims of fraud file complaints. "We need those complaints because we are looking for patterns," he says.

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