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Big Data means Big Brother

Kim S. Nash | July 23, 2012
One credit bureau in the United States shows how Big Data is helping not just to sell information but also new ways to look at massive data to derive new business insights.

At Equifax, insights also come from an executive brain spark. Last spring, Webb's imagination was caught by a CNN story about a US$500,000 credit card fraud. According to federal investigators, two brothers conspired with an employee at a Beverly Hills dentist office to create hundreds of fake people who looked real on paper. They made up names, Social Security numbers and other personal data to generate "synthetic" individuals to whom the insider could pretend to give loans for dental work. The insider then reported the loans and false payments to Experian, to establish credit histories under names such as Garnik Dumanov and Grisha Stpanov.

For more than a year, the trio got credit cards under these and other false identities from Bank of America, Wells Fargo and 19 other banks, which approved them after seeing good credit scores. DirecTV and several cell phone providers approved accounts. Car dealerships approved loans for an Audi Q7 and a Lexus IS 250.

Webb emailed Brooks: Could we catch scams like this?

Brooks, Manthey and other colleagues looked up more details about the crime and pulled internal data beyond just credit reports from across Equifax's wide assortment of records. Then they began testing new ways to analyse the information in an effort to produce the outcome they already knew to be true -- that Stpanov, for example, couldn't be real.

Typically, someone with valid identity information will show up in other files, even if he doesn't have credit, by paying a phone bill, for example, or subscribing to a magazine. Manthey said the Equifax data showed that the synthetic individuals "obtained lines of credit, then vaporised."

"A normal person would have a footprint in many areas," Brooks added. "Our 360-degree view lets us not be fooled."

This kind of reverse analytics, spurred by Webb, ultimately resulted in new fraud-detection tools for Equifax's security team to use with clients.

The fraudster brothers, meanwhile, are in federal prison and the dentist's office insider is on probation.

Beyond Financial Reporting
The way Webb sees it, new regulations for the mortgage industry hand Equifax another opportunity. The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010, holds financial institutions more accountable for bad loans. Equifax quickly launched Undisclosed Debt Monitoring, an always-on service that monitors a borrower's major spending during the time between getting approved for a mortgage and the closing date. Taking out a car loan after you've been approved for a mortgage, for example, can change your risk profile, possibly putting you outside the bank's threshold for the mortgage deal.

Assessing the mortgage crisis, financial experts realised simple credit scores don't provide enough information for banks deciding whether to approve a big loan, Webb said. "We identified gaps in their knowledge."

 

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