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Combat cyber and fraud with FiVerity

What is FiVerity?

FiVerity provides financial institutions with cyber fraud defense to combat a dangerous and growing threat - the convergence of fraud-related theft with sophisticated, high-volume cyber attacks. To identify these evolving threats, including synthetic identity fraud (SIF), FiVerity combines machine learning with the expertise of each institution’s fraud analysts.

Current industry landscape

As the world moves more digital, there is a greater risk for cyber fraud. Particularly as banks and credit unions strive to remain relevant and grow new accounts, their digital transformation initiatives have become their Achilles heel – opening the door wider for cyber fraud.

The biggest problem seen today are cyber hackers impersonating real people in a very sophisticated and increasingly automated fashion.

Not only are they impersonating people to gain access to accounts to steal money, they also fabricate fake or “synthetic identities” to perpetuate fraud. Synthetic identity fraud, or SIF, is a complex form of identity theft in which criminals combine pieces of stolen personally identifiable information to form a new identity. SIF is one of the fastest-growing crimes in the U.S. In 2020 alone, SIF cost U.S. financial institutions $20 billion (FiVerity).

It’s both a fraud and cybersecurity crime that is responsible for a staggering amount of credit losses. Global criminal organizations use these identities to steal billions from consumer lending institutions and fund human trafficking, illegal drug production, and other crimes.

Although fraud and risk managers have been interested in sharing information on suspected fraudsters for some time, a variety of legal, competitive and logistical concerns have held this back. FiVerity’s Cyber Fraud Network is giving the consumer lending industry the ability to share information on suspected fraudsters while fully protecting their customers’ personally identifiable information.

The creating of FiVerity

The idea of FiVerity was born in 2017 when Greg Woolf founded the Boston AI Think Tank. It was a forum of senior executives from financial institutions and government agencies exploring how AI can be used to modernize financial crime detection. The motivation for the group coming together was its collective recognition of hackers’ and fraudsters’ increasing use of sophisticated AI and scaled automation in their attacks.

The Think Tank all knew that to stand a fighting chance against bad actors armed with AI and automation tools, they needed better defensive weapons. It was there and then that the idea and mission of FiVerity was born: to leverage machine learning with the experience of human analysts to help detect and thwart cyber fraud.

Today, FiVerity is delivering on that vision with it's machine learning-powered platform. This innovative platform observes and captures cyber fraud behavior, strategies, and tactics used to detect fraud in new account applications and openings. Using advanced models and algorithms, and a unique ‘human in the loop’ capability, FiVerity uncovers patterns that are the telltale signs of financial crimes.

To date, FiVerity has saved banks and credit unions millions of dollars by catching over 50% of previously undetected cyber fraud.

FiVerity's mission

FiVerity’s Cyber Fraud Network is the industry's first collaborative system built to combat the convergence of cyber tactics with fraudulent theft. The network facilitates the secure exchange of fraud intelligence between consumer lending institutions, while preserving the privacy of personally identifiable consumer information (PII). The Network acts on fraud detected within consumer lending institutions, by financial regulators, and by law enforcement agencies.

The Cyber Fraud Network, which can be accessed through a simple and secure API integration, strengthens each user’s defense by alerting them to fraudulent activity detected throughout the network. This multiplies each user’s ability to identify - and learn from - new fraud patterns. In addition to providing ongoing defense, FiVerity offers a fast and lightweight portfolio analysis to identify SIF accounts within existing portfolios.

The Network’s “double-blind” approach splits the encryption key across members, so that no single institution holds the complete key to decrypt PII data. This allows financial institutions to maintain complete confidence in the security of their customer data, as the only companies that can validate a shared profile are the ones that already possess the corresponding PII.

A customer story

In 2018-2019, despite deployment of a layered approach to fraud detection, Digital Federal Credit Union (DCU) was impacted by a sophisticated fraud ring focused on used car loans. In all, 17 credit unions and 5 banks were targeted while the total losses remain unknown. DCU incurred $419K in losses to this fraud ring.

Once this episode came to light, DCU’s executive team and technology leaders further strengthened the organization’s anti-fraud efforts. The team sought out a more proactive and automated fraud solution that would better protect the organization and its members.

DCU and FiVerity began working together through DCU’s FinTech Innovation Center, an accelerator program that supports and works with early-stage FinTech start-ups in New England. That’s where FiVerity’s Cyber Fraud Defense platform caught the attention of DCU’s technology leaders. The DCU team saw the potential in FiVerity to bring a new approach to identifying sophisticated types of cyber fraud.

With machine learning-powered capabilities and innovative ways of delivering actionable, proactive threat intelligence, FiVerity’s anti-fraud solution looked to be well aligned with DCU’s new requirements.

From June 2020 through June 2021, FiVerity’s Cyber Fraud Defense platform detected and prevented more than $1.8 million in fraudulent activity for DCU.

In addition, the platform’s machine learning features unique, “human in the loop” capabilities, which incorporate the insights and expertise of fraud analysts and investigators, continually boosting the system’s effectiveness. In recent months, the platform has achieved a fraud recovery rate of over 50%.

“The FiVerity solution is an enormous help,” said Kelley Jenkins, Fraud Investigator for DCU. “It has the processing power required to handle high volumes of data, plus automation and intelligence that connects the dots on these sophisticated fraud schemes. It’s a great tool that helps me to be more effective and efficient at my job.”

The results have indeed been impressive. In addition, in a retroactive study of the used car fraud ring, it was shown that FiVerity would have caught 74% of the cases, over $260K of the $419K lost to the fraudsters.

About the team

The company’s mission is to combat existing and emerging cyber fraud threats to support a secure and trustworthy global financial system. Fiverity’s goal is for the Cyber Fraud Network to capture 70% of all SIF accounts by 2023.

The key members of FiVerity’s team are: Greg Woolf, Founder and CEO; Nilabh Ohol, Ph.D., Vice President of Data Strategy; Adam Garson, Vice President of Marketing; Suresh Kumar, Vice President of Engineering; Mark Ovaska, Product Manager; and Jennifer Hoffman, Operations Manager.

FiVerity is committed to developing a team with diverse backgrounds and expertise, along with a culture of respect for all peers, partners, and customers.

A quote from the founder

“The organizations behind SIF and other financial fraud activities are highly sophisticated. The same accounts are used to steal from multiple banks and institutions at the same time. The only way to match their efforts is to work together. Collaboration between financial institutions is critically important to solving the problem of synthetic identity fraud. Here at FiVerity, our team is dedicated to empowering institutions to accomplish this previously daunting task.” - Greg Woolf, Founder and CEO.

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