What Sucks with Social Networking

I am doing my best to get my GenX brain around this whole social networking thing. I also have to explain that I am a borderline GenX'er and was extremely close to being a 'Boomer.

That being said, I have done everything I know how to do with LinkedIn and Twitter. I guess at this point - I have about 317 connections on LinkedIn and belong to 19 groups. On Twitter - I am following 12 people and have 9 people following me.

I obviously find some value or at least potential value by using these tools - but that's no fun to write about, so I thought I would instead right about what sucks.

- I am sick of these groups on LinkedIn. I am bombarded with group discussion boards, when more than half are commercials in disguise or just blatant job postings. LinkedIn needs a better way for Group Leaders to police this. I admit that in the early days - I was trying to promote - until I realized how much it bugged me. So - yes - I was an ass and I apologize to anyone I offended.

- You can't sync accounts. If you by chance set up 2 separate accounts on LinkedIn and are trying to merge - don't bother. When you look it up in the FAQs - it says "Don't bother".

- Why do I have strippers following me on Twitter? I am a neophyte on Twitter, but this week I got notice that some lovely looking woman was now following me. When I looked at her BIO - I realized she was a stripper. Not that I am against strippers, but I was trying to envision myself at my Twitter home page with my wife seeing this seductive stipper sending me comments about what she was doing at the moment.

- Why is it so hard to find people on Twitter? I look up Bill Gates, and it tells me I can follow "NotBillGates". However - I did find and begin following Barack Obama. Mostly - because I am most curious on the subjects that our leader Tweets on. We'll see how that goes, but for now - it is boring.

- How to Tweet your horn. Now that I have 9 people following me - all but one that are not strippers - I feel compelled to tweet. However - I am striking out on what to say. "Hey - just got done eating a burger and it was yummy", or "just mowed the lawn - man its hot".

Anyway - thanks for letting me rant.

Peace Out

BFF Adam

Medical ID Theft: The Next Wave

With all the attention over the past few years on Identity Theft in general, there is a new trend that is continuing to gain momentum. While identity theft in general has leveled off a bit, the category of Medical Identity Theft is continuing to be more of an issue.

Medical Identity Theft can take many guises, but can be thought of generally as someone using your identifying credentials to receive medical services. This could be anything from an emergency room visit to reconstructive surgery. With the costs of health care continuing to sky-rocket, this should come as no surprise. In fact, when compared to financial service where the average 'loss' is around $10,000 - this can be quickly dwarfed when it comes to health care.

The latest crime stats from 2007 suggest that over 250,000 consumers were the victims of Medical Identity Theft. Much like financial services, the typical fraud can involve either someone using an existing Insurance ID and policy information to utilize an existing account, or alternatively, apply for new services in the victim's name using the stolen ID information such as SSN and DOB.

Historically - health care providers have not deployed the scrutiny in the new account opening process as banks. However - this is beginning to change. Partly due to the increase in related fraud, but also due to the FACT Act provisions which will require health care providers to screen for Medical Identity Theft. While health care providers have not fallen under the regulatory banking agencies, they will now be regulated with respect to Identity Theft practices by the FTC - As of August 1st, 2009.

With the new mandate to electronify all medical records - we expect to see a lot of activity here over the next few years.

Supreme Court Makes Decision on Identity Theft

A unanimous Supreme Court said in May that illegal workers who use falsified IDs can't be considered identity thieves without proof that they knew they were stealing real people's Social Security and other numbers!

How ridiculous is this?

The court, in an opinion by Justice Stephen Breyer, rejected the government's argument that prosecutors need only show that the identification numbers belong to someone else, regardless of whether the defendant knew it.

So - here we all are trying to deter identity theft, and our Supreme Court says it can only be prosecuted when someone "knows" that the ID was real. This is rarely the case. When people buy and steal IDs, they rarely ever know if they are indeed real.

This case was brought forth due to immigrants who were accessing various IDs to gain employment. However - this ruling I am sure will now make its way into the financial services sector.

Can we turn our brains back on...... please!

Here's a link to one version of the truth.

http://www.brownsvilleherald.com/news/identity-98001-theft-used.html

Examinations In Process

We are finally beginning to get some good information regarding how banks and credit unions are doing coming out of their initial FACT Act Red Flag audits. The great news is that our clients are being given a passing grade by the auditors for using our Safe2Change solution to meet the address change provisions of FACT Act. Great news, because they deloyed Safe2Change as a much more cost-effective solution to complying versus sending out letter confirmations. At a time when costs are more critical than ever, saving some dollars here is very important, and our customers are able to realize these savings.

More interestingly, we are seeing a couple of general trends emerging from these audits that are worth thinking about.

Looks like the auditors are being somewhat lenient in this first pass. Clearly there are the handful that completely ignored the regulation and are getting it with both barrels. However - in the first round we are hearing that they are generally not having many issues.

The one gap that we are hearing now repeatedly is that the examiners are beginning to scrutinize compliance strategies where financial institutions are mailing letters to the customer's old and new address to achieve compliance. The issue is sufacing not because of the letter mailing strategy, but because FACTA requires that the institution not fulfill subsequent requests credit cards, debit cards, checks, etc. until the consumer has had enough time to receive and respond to the letter. This makes sense. If the institution sends out a letter and then sends the requested card to the new address (where the fraudster is waiting) - then this strategy will still still result in identity theft.

We are finding that most institutions have deployed the letter mailing strategy. However - we are also finding that these same institutions are not putting a "hold" on the account to block the request for cards and checks. This is not allowed per the FACT Act, which states that you can send letters, but not fulfill these additional requests until enough time has passed.

In these early examinations, we are hearing this issue being brought up repeatedly. While the examiners are being a bit lenient in round 1, we see this as being an issue that will be scrutinized much more and that financial institutions will need to plug this hole.

A.E>>>

Subscription Pricing?

For years, the largest banks have deployed fraud tool after fraud tool. In doing so, the typical end result is a combination of many tools that overlap in form and function.

This makes it difficult for institutions to bring in additional tools or functionality to improve their fraud detection capabilities. One of the major barriers is price. As more and more tools are deployed - the incremental benefit is reduced - yet it is rare for the fraud solutions provider to alter their price based on this.

One of these new tools is what can be referred to as "Velocity" or Link Analysis". Most institutions know that an important piece of their overall strategy is to monitor repeat activity at the same address, phone number or Social Security Number. Eg. why have 5 unique people all applied at 123 Main ST in the last week? However - most insitutions have either not deployed that or are doing it in a rudimentary way.

We have developed a new technology that takes velocity and link analysis to a new level allowing our clients to expose fraud rings that they have not been able to see before.

However - while the value can be realized - we run into this dilemma described above. Because of this - we are beginning to think about a subscription based pricing model that incentivizes more volume not less. End result - better detection - less cost.

What's in an Address Change?

We've been spending the past few years understanding everything there is to know about the 'risk' of an address change for financial services companies. We know that this is the leading indicator of account takeover and a major reason for the new Red Flag Guidelines.

Over the past few weeks, however, we have begun to look at the business problem a bit differently. While the address change event is associated with risk, this risk is relatively low. However, we are finding that the address change event is the single largest reason for a customer leaving the bank!

We have found that approximately 70% of all consumers that move consdider changing their primary banking relationship and that nearly 25% of consumers do end up changing their primary bank account within 120 days of moving.

When you think about it, it make sense. When you move, many times you move away from the bank branch where you conducted your banking. In doing so, it is somewhat likely that you change your bank account to be closer to the branch. Couple this with the fact that banks routinley are targeting new customers with Free $50 offers, and you can see how 25% of movers change banks.

When you consider that 15% of a typical banks customers move every year, this equates to 3.75% of their deposits walking out the door. When we ask banks what they are doing to retain these customers, the answere is almost always "nothing".

We believe there is a major opportunity to stop a significant percentage of these customers from attriting by communcating more effectively. For example, telling them about your remote banking options, or offering up a home equity line to someone that moved into an owned home.

We are beginning to look more holistically at the Address Change Event as being one of the most important in the customer's lifecycle. An event that includes bothe risk AND opportunity.

Too Busy To Save Money

This economic crisis becomes more of a circus each and every day. It wasn't too many days ago that Wells Fargo, Chase, and US Bank were being lauded for avoiding the crash that had hit others such as Countrywide, WAMU, etc...

Flash forward a few short months, and they are now in similar spots, cutting dividends and reporting record losses. It tends to make you wonder what other rocks that have yet to be turned over. It is getting downright scary.

Given that ID insight sells primarily to financial services companies, I am routinely asked how this recession is impacting us. Until very shortly - my response was pretty similar. What we offer is a way for banks to save money - so we hadn't seen much of a negtive impact.

However - as of late we have seen that begin to change. Normally - when you walk in the door and tell someone that they can save them significant amounts of money - they are interested - as they should be. Increasingly - however, we are hearing more banks explain that even though they are interested that they cannot afford the time to save money. We are finding many (more every day) banks that simply are looking to keep the doors open.

When we stop making sound, rational business decisions - that's when you realize that this is some really scary stuff.

A.E>>>