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New account fraud: Limits of a statistics-based prevention and innovative approaches
This article deals with account opening fraud, defined as any opening of a bank account with intent to defraud, in particular to fraudulently obtain credit-related services. The focus is on the representation of the common statistical preventive mechanisms as well as the limits of their effectiveness. The latter are pointed out based on the descriptive analysis of an extensive real data set, provided by a leading German retail bank. Finally, innovative and promising solutions for fraud prevention are presented.
Keywords: new account fraud, account opening fraud, fraud management, logistic regression, anti-fraud scorecard, retail banking.
JEL-Classification: G 21, D 14, K 42.
1. Introduction
This article deals with account opening fraud, a section of bank fraud that, after the rapid increase of its appearance on the market in recent years, has received increased attention from banks as well as in scientific literature. Bank fraud is defined as the willful attempt or the execution of a plan with the aim of defrauding a financial institution or obtaining money or other assets from the ownership or management of a financial institution under false pretenses and promises (Ngai et al. 2011, ...