Fraud Detection
Chapter 1
Fraud
Fraud can be defined as any activity that leads to the obtaining of financial advantage of causing of loss by implicit or explicit deception. It is the mechanism through which the fraudster gains an unlawful advantage or causes unlawful loss.
There are many different types of fraud, I would like to mention some of the well known fraud types in the area of the Internet, which is an area where more than one billion peole are in touch with everyday.
Fraud Terminology
• Auction Fraud : involves fraud via the misrepresentation of a product advertised for sale through an Internet auction site (e.g. e-bay, amazon) or the non-delivery of products purchased through an Internet auction site.
• Check Fraud : is the unlawful use of cheques in order to illegally aquire or borrow funds that do not exist within the account balance or account-holder’s legal ownership
• Credit Card Fraud : This scam makes use the card’s details without possessing the physical card. The fraudster can carry out his criminal activities using these details
• Nigerian Fraud : refers to a letter sent by an unsolicited e-mail. These persons claim to be officials, businesspeople, or the surviving spouses whose money is tied up and asking now for some financial help
• Phishing : The fraudulent person pretends to be from a legitimate bank and asks the victim to re-enter the personal information (on a prepared webise) due to some internal problems.
• Lottery Fraud : Starts with a notification mentioning to have won a big amount of money.
Victim has to pay “processing fees” or “tranfer charges” so that the money can be distributed
Despite of of all the advances in fraud detection technologies, fraud losses still continue to pose a significant problem to many industries, telecommunications, banking, insurance and many others.
According to Cifas1 , fraud activities are increasing year by year as the statistics in table 2.1 and 2.2 clearly show.
Fraud cases identified
Jan
Fraud
Fraud can be defined as any activity that leads to the obtaining of financial advantage of causing of loss by implicit or explicit deception. It is the mechanism through which the fraudster gains an unlawful advantage or causes unlawful loss.
There are many different types of fraud, I would like to mention some of the well known fraud types in the area of the Internet, which is an area where more than one billion peole are in touch with everyday.
Fraud Terminology
• Auction Fraud : involves fraud via the misrepresentation of a product advertised for sale through an Internet auction site (e.g. e-bay, amazon) or the non-delivery of products purchased through an Internet auction site.
• Check Fraud : is the unlawful use of cheques in order to illegally aquire or borrow funds that do not exist within the account balance or account-holder’s legal ownership
• Credit Card Fraud : This scam makes use the card’s details without possessing the physical card. The fraudster can carry out his criminal activities using these details
• Nigerian Fraud : refers to a letter sent by an unsolicited e-mail. These persons claim to be officials, businesspeople, or the surviving spouses whose money is tied up and asking now for some financial help
• Phishing : The fraudulent person pretends to be from a legitimate bank and asks the victim to re-enter the personal information (on a prepared webise) due to some internal problems.
• Lottery Fraud : Starts with a notification mentioning to have won a big amount of money.
Victim has to pay “processing fees” or “tranfer charges” so that the money can be distributed
Despite of of all the advances in fraud detection technologies, fraud losses still continue to pose a significant problem to many industries, telecommunications, banking, insurance and many others.
According to Cifas1 , fraud activities are increasing year by year as the statistics in table 2.1 and 2.2 clearly show.
Fraud cases identified
Jan