SAS® Analytics uncovers fraud around the world

Companies and governments spotlight fraud fighting during International Fraud Awareness Week

CNA detects, prevents insurance fraud beyond expectations

It threatens every industry, in every country. This year alone, fraudsters could siphon off $3.9 trillion from the global economy. The Association of Certified Fraud Examiners (ACFE) estimates fraud costs organizations 5 percent of annual revenues worldwide through headline-grabbing cyberattacks, stealthy insurance scams and illegitimate manipulation of government programs.

Fraud is zapping corporate profits and padding the cost of goods for both businesses and consumers. For organizations scrambling to detect and prevent fraud, advanced data analytics are vital to quickly finding bad transactions within big data.

“As the world’s most widely used advanced analytics platform, SAS® has been on the frontline of the fraud battle for more than 30 years,” said Stu Bradley, Senior Director of Fraud and Security Solutions at SAS. “SAS products target concerns across fraud and improper payments, anti-money laundering compliance, and cybersecurity, helping our customers impact their bottom line.”

International Fraud Awareness Week aims to minimize the impact of fraud through awareness raising and education. SAS works with banks, insurance companies, health care organizations and government entities to combat the growing incidence and sophistication of fraud, waste and abuse.

“Fraud is a global menace. As a global company, SAS sees it as vital to join the ACFE in supporting International Fraud Awareness Week," commented Bradley.

Banking – Nets Group detects fraudulent card transactions

As a leading Nordic payment services provider, Nets Group depends on staying a few steps ahead of fraudsters. For its leaders, that meant upgrading fraud management for card payments.

Historically, detecting fraudulent payment card transactions required the attention of an individual internal fraud expert at near-real time. But by the time the investigator reviewed the payment, it had been completed, and perhaps followed by several more. Nets had to do more at an earlier stage.

“We needed to go from reactive to proactive,” says Kaspar Kock Kristensen, Senior Vice President for Fraud and Dispute Services at Nets Denmark. “SAS enables us to proactively prevent fraud from taking place – stopping suspicious transactions before processing. We have since gained a 25-40 percent reduction in card fraud.”

Insurance – CNA prevents claims fraud

For CNA, the eighth-largest US commercial insurer, fighting fraud is fundamental. "We train our adjusters to identify red flags, but we knew we could do a better job identifying likely fraud and also avoid the wasted expense of investigating false positives,” said Tim Wolfe, Assistant Vice President of CNA's Special Investigations Unit.

Armed with SAS predictive models, the company runs weekly analyses against its claims data and text notes from adjusters. “Each Monday morning, after a weekend data run, SAS flags a percentage of claim alerts that score high for fraud potential. We review about 100 alerts a week, and we're averaging a 20 percent hit rate – about one in five alerts that we review is a good case for investigation.”

Industry research suggests that 10 percent of claims likely contain a fraudulent element. Before, CNA was only flagging 3.7 percent as potentially fraudulent. Within two years of implementing SAS, CNA saw that rise to 8.1 percent, resulting in recovered or prevented fraudulent claims totaling over $6.4 million.

Government – Kentucky Department of Revenue spots improper tax refunds

In 2013, the IRS paid out $5.8 billion in tax refunds it later realized were fraudulent. Such tax scams are one reason the Kentucky Department of Revenue (KDOR) is stepping up efforts to detect individual income tax compliance issues and save taxpayer money. KDOR’s weapon of choice is SAS predictive analytics.

“Our job is not just to collect taxes, but to get taxpayers the money they are owed as quickly as possible,” said Mack Gillim, Executive Director of the Office of Processing and Enforcement for KDOR. “Increasing fraud and abuse puts even greater responsibility on us to be diligent. Analytics helps with that.”

Tax returns are now scored every night, with potential issues flagged for examiners to review the following day. This quick process helps KDOR in its aim to send refund checks to taxpayers within 14 days. Working in parallel with the existing system during this year's tax season, SAS also helped stop an additional $1 million in fraud in the early months of 2015. KDOR expects the year-end total to double that amount.

Health Care – Fighting fraud and improper payments

Improper health care payments waste tens of billions of dollars in the US each year and cause increased benefits costs for employers and health plans. Paying claims first and then reviewing them for fraud, waste and abuse is ineffective. SAS is working with health plans and other stakeholders to use predictive analytics to detect aberrant activity early on, reducing losses and increasing recoveries.

This week, SAS is a sponsor of the NHCAA Institute for Health Care Fraud Prevention's Annual Training Conference in San Diego. Ricky Sluder, senior solutions architect for SAS, is presenting on the need for a robust business analytics foundation to identify suspicious patterns pointing to programmatic fraud, waste or abuse.

Learn more about International Fraud Awareness Week and SAS fraud and security intelligence solutions.


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