ING Lease has recently
installed an impressive new system for tracing fraud. Jason T Hesse finds out how it
works.
“If someone wants to defraud you,
they will defraud you. So what you’ve got to do is make it harder
to defraud you than it is to defraud somebody else, and they will
go elsewhere.”
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This is how Chris Stamper, chief
executive of ING Lease UK, summarises his approach to fraud.
Earlier this year, ING Lease UK
implemented an automated fraud detection system to help intercept
fraudulent applicants. The system, provided by Human Inference and
embedded into CHP Consulting’s ALFA Business Rules Engine, is
“fantastic”, according to Stamper.
“The software acts a bit like doing
a Google search over our information, and because it’s embedded in
our system, it throws out potential fraudulent matches at every
stage,” he explains.
While Stamper and Gavin
Wraith-Carter, the company’s vice-president of underwriting, both
insist that the business has not seen a major spike in fraudulent
applications in the past 12 months, the business still detects
between £2.5 and £3 million (€3 million to €3.5 million) worth of
potentially fraudulent activity every month.
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By GlobalData“That’s probably been about the
same in the last two to three years, however,” says Stamper. “It’s
between 30 and 50 deals per month, but bearing in mind we see 450
deals every day, it isn’t really a massive amount.”
Every month, ING Lease compiles a
list of deals that were declined because they had some of the
characteristics of being fraudulent. The details are then loaded
onto ING Lease’s automated system to help stop future deals coming
through again.
“We’ll review the potentially
fraudulent transactions after an 18-month period, to see whether we
have been over-zealous. But generally around half of the businesses
involved will have showed distress or will have failed by then,”
Wraith-Carter says.
Tricky to define
Stamper adds that it can be
quite tricky to define a fraud – the company assesses every deal it
receives, looking at the supplier, the customer, the broker and the
asset to be financed.
The vast majority of ING Lease’s
business comes from brokers, which means that it is the broker who
holds the relationship with the customer or supplier, Stamper says.
He adds that although his company does try to investigate brokers’
relationships with suppliers, a finance company can still be
duped.
“You can certainly get caught out,”
he says, referring to the Global Telecoms scandal revealed by
Leasing Life earlier this year.
“It’s usually a fair bet that if
you don’t have any problems with them, and you’ve dealt with them
for a long time, then you’re usually okay. But just because someone
has dealt with them for a long time, it isn’t automatically
safe.”
Wraith-Carter believes that the
real key to preventing fraudulent activity is having experienced
people who understand what the issues are.
“Just having a database of your
past history in itself isn’t good enough. You need experienced
staff to see if there are things that are just not quite right, who
can just look at a deal to see if the equipment is at the right
value,” he says.
Stamper adds: “The problem is that
the government sometimes actually makes it easier for people to
commit fraud.”
For example, he laments that
directors are no longer required to state their private addresses
on Companies House documents.
“The more information that’s
available to credit reference agencies, the better. National ID
cards would be great – and even though people would still produce
them fraudulently, we would still be in a better position than we
are at the moment,” he says.
But regardless of the fraud, ING
Lease never lets it go, as it wants to build-up its network of
information.
“Some of the deals that we’ve seen
have been small IT deals under £10,000, where the fraudsters think
that because it’s under that amount, it will go under the radar.
But if you do enough of them, it’s quite a lot of money,” Stamper
adds.
“We talk about doorways,”
Wraith-Carter adds. “If somebody gets through the door, it won’t be
just that one deal.”
