Socure’s Friendly Fraud Fighting Consortium Hits Data Collection ‘Milestone’
Socure says it has reached a milestone in its collaborative effort to combat “friendly fraud.”
The identity verification firm last year formed the First-Party Fraud Consortium, a group of companies that came together to battle the type of fraud — also known as friendly fraud — that happens when people use their own identity to carry out dishonest acts for financial gain.
Now, Socure says the group has compiled data intelligence covering 190 million contributed identities, 121 million of which are unique identities, along with 325 million accounts and 20 billion transactions, “marking an unprecedented collaboration in financial services history.”
“First-party fraud has evolved into a $100 billion crisis that traditional fraud prevention methods simply cannot address,” Ori Snir, head of product management, fraud and identity solutions at Socure, said in a news release.
“By bringing together the industry’s leading financial institutions and platforms, we’ve created an unparalleled network effect that enables us to identify and stop fraudulent behavior before it can take root across multiple platforms. This is something the industry hasn’t been able to accomplish before at scale.”
Examples of first-party fraud/friendly fraud include people disputing legitimate ATM withdrawals or debit or credit card transactions for goods they had no intention of paying for.
Socure says its consortium’s data-sharing initiative lets members detect and prevent this fraud via rapid analysis of dispute histories, payment denials and account closures across platforms.
The consortium includes five of the top 10 financial institutions in the U.S., as well as FinTechs such as SoFi, Green Dot and Dave.
According to Socure, the group marks “the first time that major financial institutions, fintechs, payment platforms, sports betting companies, and merchants have united to share data and insights to combat first-party fraud.”
A PYMNTS report earlier this year examined the challenges facing merchants as they deal with friendly fraud.
“Friendly fraud can eat into not just a dollar amount but also an operational cost amount to merchants, where if you’re a small business and you’re focusing more time on figuring out how to investigate [friendly fraud], working with your acquirer and your payment facilitator, that is lost time spent away from your business,” Mike Lemberger, senior vice president, regional risk officer for North America at Visa, told PYMNTS.
Meanwhile, research shows that merchants who engage in greater levels of collaboration with payment service providers (PSPs) are more likely to employ screening mechanisms that spot potential fraud as the cause of failed payments.
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