NEW TECHNOLOGY TARGETS IDENTITY THEFT
Address Differential AnalysisSM breakthrough focuses on the identifying element that cannot be compromised: the address
St. Paul, Minn., May 21, 2004 — The financial services industry will soon have a potent new weapon for use in the ever growing war against identity theft. The new Address Differential AnalysisSM technology was recently developed by St. Paul-based ID Insight Inc. to help card issuers and financial institutions identify fraud before it begins with respect to account takeover and fraudulent new applications. The working principle behind the technology is that identity thieves can obtain all the necessary identifying elements of a victim in order to carry out a fraud; however, they cannot receive mail at the victim's home address.
Adam Elliott, co-founder of ID Insight says, "It's all about the address. Nearly every case (more than 90 percent) of identity theft involves an address manipulation. Crooks can effectively steal your name, Social Security Number, driver's license number and birth date, but they certainly can't receive mail at your house. Instead, they'll provide another address where the bills and bank statements pile up. If you can determine that there is an address manipulation associated with the account, you can catch the thief."
The patent pending Address Differential Analysis (ADA) solution is an analytical engine that collects data from more than 20 data sources and produces a risk score, assessing the likelihood of a fraudulent new application or account takeover in progress. Data sources used in the ADA analytical engine include various governmental, demographic, and other proprietary sources. Along with comprehensive risk score produced, the ADA engine also produces a Reason Code indicator, which is based on which red flags were raised in the analysis. The Reason Code Indicator reflects what factors caused the engine to produce that particular risk score. Examples of Reason Codes may be an invalid delivery point code or a large change in income.
In preliminary testing, the ADA analytical engine has produced very encouraging results. 50% of total fraud in the data study was identified in the top 5% of risk scores produced by the ADA engine. Furthermore, 80% of total fraud was identified in the top 20% of risk scores produced by the engine.
The new ADA technology can potentially diminish the huge losses associated with identity theft that are suffered by financial institutions and consumers alike. Its usefulness extends to all areas of the financial industry, as 20-30% of all credit card applications have an application address that is different than the last known address of the consumer and 40% of all retail banking applications involve a similar address mismatch.
The cost effectiveness of the ADA breakthrough is especially attractive to the financial services industry. Because virtually all identity thefts involve an address mismatch, and an address mismatch only occurs 20-40% of the time for new applications, the costs associated with screening and investigating suspicious transactions can be greatly reduced. By using the ADA system, which focuses in on the 20-40% of the transactions in which virtually all fraud occurs, a card issuer or bank can potentially reduce their cost by 60-80%.
The ADA system will be made available to the financial services industry for the first time in July 2004.
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Media Contacts:
- Brian Bellmont for ID Insight, (952) 233-0428,
