The U.S. Secret Service calls check fraud one of the greatest threats to the country's financial system. With losses of more than $5 billion per year nationally, banks are struggling to effectively and efficiently investigate fraud incidents and build enforceable cases. Retailers lose billions more in fraud and organized retail theft (ORT), and identity theft is the fastest growing crime in America.
Part of what makes these cases so difficult to prevent, detect and catch is that banks and retailers have little way of knowing that fraud has occurred until after a customer notifies them of an unauthorized withdrawal or an identity theft, which can be up to 60 days after the fact. Since fraudsters know about this time gap, they're likely to have hit several more bank branches or retail stores by this point and left town. ORT suspects travel rapidly from state to state, frustrating local investigators.
By changing identities and moving fast, fraudsters can evade detection by even the most diligent investigators. Even if the fraudster has hit other branches within the same bank chain, it is rare that an investigator would be able to find and link the evidence needed to connect the fraudster to multiple cases. In fact, oftentimes a repeat offender is caught and only booked with one charge of fraud because the other incidents have either not yet been discovered or have not been linked to the same fraudster.
With only one count, the criminal posts bail and goes back to work within hours. If the fraudster is smart enough to hit different bank chains and retailers across several states, law enforcement has a very tough time connecting the dots or tracking down the evidence needed to charge and convict a suspect.
Though identity theft, fraud and ORT pose unique challenges to both investigators and law enforcement agencies, various efforts are now converging to effectively combat the problem.
Advances in video surveillance
First, video surveillance technology has progressed to help investigators identify and track fraudsters across branches and stores. While surveillance systems have traditionally just recorded and stored footage -- requiring investigators to sift through hour after hour of real-time video to find the event or suspect -- new products have incorporated analytical tools like facial recognition and advanced video searching capabilities.
Using technology similar to what made millions of Internet pages searchable, these systems make thousands of hours of video from geographically distributed locations searchable in minutes. Underlying analytics like face recognition and motion analytics help investigators find information about a specific case, link fraudsters to other cases and ferret out links between accomplices to build cases against fraud rings.
Secondly, while video surveillance has progressed, industry and law enforcement also have increasingly sought ways to share information about criminals. The CrimeDex network, recently acquired by 3VR Security, located in San Francisco, California, provides a searchable online database that contains 14,000 suspects and nearly 200,000 fraudulent check items representing just under $1 billion in losses. Investigators and law enforcement officers can search the database by a number of parameters including check number, various suspect details, account number or location. In addition to the database, CrimeDex provides a network of more than 600 financial institutions, retailers and law enforcement agencies that are working together to fight crime by sharing information about criminals and cases.
Together, these solutions enable investigators to link suspects to all of their incidents, build an enforceable case, share their information with other investigators to determine whether this criminal can be linked to an even larger case and sync up with law enforcement to ensure the suspect is prosecuted for all of his crimes. The CrimeDex network also issues regional crime alerts to warn members about criminals working in their area.
Det. Chris Edin, Financial and Bias Crimes Investigations, Thurston County (Washington) Sheriff's Office, recently used CrimeDex to help solve a case. "After requesting a CrimeDex alert, I received a call from another detective within just three days," he says. "The information he provided helped me positively identify my suspect who will now be criminally charged along with her accomplice. Without CrimeDex, I would not have identified my suspect."
Numerous mainstream banks and law enforcement agencies already use the CrimeDex database. Now surveillance systems have evolved to the point where this database can be used as part of an integrated approach to crime management.
Combatting fraud and robbery
All of this can seem a little abstract, but when you examine these new crime-fighting tools through the filter of the average incident, their usefulness is clear. Imagine a typical fraud incident in the average U.S. bank, equipped with standard security equipment, including the latest DVRs and maybe even a few video analytics. A fraudster walks into the bank -- the third bank he has hit this month. Perhaps he behaves strangely, but the teller, trained to provide quality customer service, ignores her gut instinct and is courteous and helpful to the "customer." The fraudster leaves with $700 in cash.
Thirty days later, the customer whose account that fraudster was stealing from notifies the bank that unusual account activity occurred on a specific date. The bank hands the case over to an investigator, who is working on several other cases. It takes the investigator hours to comb through video from various cameras to find the best image of the perpetrator. Still the investigator doesn't know if this same suspect has hit other accounts at the bank using different names. By the time the case is handed over to local law enforcement, the criminal has hit several more branches and the trail is cold.
If that bank had access to the analytics and video management technology discussed in this article, the investigator could first search against the customer's account number and find the suspicious transaction in seconds, along with an image of the fraudster's face and associated video.
The investigator could then search for the fraudster across all branches to find any other fraud incidents. Thousands of hours of video is searched in seconds, and lo and behold, the fraudster has hit three other branches and stolen a total of $10,000. At $700, this fraud crime may not have been pursued. But armed with evidence connecting the suspect to several thousand dollars worth of fraud, the investigator along with law enforcement can pursue a felony conviction.
Using CrimeDex, the investigator could then search for his suspect to discover any incidents at other banks, connect with local law enforcement to share the evidence and publish information about the fraudster to alert other member banks. An alert with the fraudster's face and information about his crimes would be sent out to banks, retailers and law enforcement agencies in the network, thereby potentially preventing further loss.
In another example of using searchable surveillance to investigate crime, a bank robber produces a demand note. The robber, like 80 percent of all bank robbers, is low-key preferring to blend in as a typical customer. The bank's cameras capture an image of his face. As soon as the bank's investigator is notified of the robbery, he can pull up the video remotely in seconds and e-mail it to the FBI and local law enforcement agency. He can query all branches for the same suspect and discover that the suspect has been casing another branch several times in a nearby town.
As video, analytics, search and database technologies converge, industry investigators and law enforcement will have the tools they need to arm themselves with the evidence required to build strong, enforceable cases and effectively fight crime on multiple fronts in record time. The criminals can create counterfeit drivers licenses and multiple identities of ID theft victims, but they can't create a new face for every crime.
Det. Sgt. (ret.) James "Gator" Hudson is the co-founder of the CrimeDex Network and a vice president at 3VR Security. 3VR is the creator of searchable surveillance, a platform-based security solution that integrates high-quality video management, video analytics, internal and external watchlists (including CrimeDex), a powerful search function, and advanced health and system monitoring to combat crime.
