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Old-Fashioned Sleuthing in the Cyber Age

Investigators are increasingly challenged to use unorthodox methods to uncover fraud.

April 16, 2015 Photo

According to a 2012 Federal Bureau of Investigation report, “The U.S. insurance industry, which consists of thousands of companies that collect more than $1.1 trillion in premiums each year, estimates the cost of fraud to be approximately $30 billion a year.”

Technology has changed everything in our industry, and that includes the way we conduct fraud investigations. The ability to determine whether a claim or claimants are legitimate is a crucial part of the resolution process. With access to advanced databases, detailed search options, and geotagging, thorough investigations today are high-tech affairs frequently conducted solely with computers.

Recently while handling an investigation for a client, I came across the dreaded proverbial “needle in a haystack.” This incident served to highlight what is often a large pothole in the middle of this technological information highway.

The facts in brief are this: The operator of an insured vehicle was involved in a multivehicle accident and had since gone missing. Fired by his employer for substandard work, the vehicle operator had simply disappeared. (The facts of the loss, if extrapolated to his poor overall job performance, leave no question that there is some truth to the basis for his termination.)

The litigation resulting from that accident was winding its way through the courts, and decisions on apportioning liability needed to be made. There were questions about who was actually involved in the accident, how many people were in each of the vehicles, and, ultimately, whether it was a fraudulent claim. The driver’s testimony could prove decisive in a pending lawsuit with large policies, multiple injured claimants, and bubbling hubris. But the key to the defense of the case had disappeared.

One would think that in this era of omnipresent surveillance both by private enterprise and public officials, and the fact that social media is woven into the fabric of our everyday lives, disappearing completely would be a challenge, even in a city of 8.4 million people.

What we had in this instance, however, was a young man who apparently made a conscious decision not to engage in online intercourse (at least not under his own name); had an outdated driver’s license; and no readily identifiable relatives or associates.

Experienced claims professionals and insurance defense lawyers have seen this before: A defensible claim quickly falls apart after a lot of time and money is committed to putting together a solid case on behalf of your insured. It is maddening because it can be avoided through better underwriting, better handling of the initial report stage, and better investigation of all involved parties. These are factors that all can be addressed.

Questions remain, though. Isn’t technology supposed to make all of these things easier to deal with? Isn’t advanced automation supposed to lead to increased efficiency?

There is a growing cross section of people ranging from blue-collar, working-class citizens to white-collar professionals who, by choice or circumstance, opt out or exist on the fringes of the technology highway. They often show up in claims files as plaintiffs, witnesses, or some other type of participant, such as drivers, custodians, and maintenance workers. Months or years after the fact, the ability to find them becomes increasingly difficult. Needless to say, this increases the probability and likelihood of fraud or misrepresentation.

Whatever their intentions, many of these people want to avoid interacting with their past. An increasing number of people exercise an overabundance of caution about their privacy and want to control access to their personal information. Others may have questionable immigration statuses, assumed identities, and forged papers, while even more may be cyber criminals using the shadows to commit their crimes.

Over the years of talking to people who fall into these categories, I have learned that their greatest and most common concern was exposure. Even those who strongly felt a need to do their civic duty were reticent when they considered the visibility that the public record of lawsuits and court proceedings would bring.

In the crowded field of companies adjusting and investigating claims, everyone adheres to the most basic of rules: Start out by availing all possible resources to track someone’s digital footprint. It is efficient, requires fewer man hours, and generally enables the investigator to pinpoint most people’s activities with a high degree of certainty. In the case of the previously mentioned disappearing insured driver we sought, all database research efforts turned up nothing.

Investigating suspected fraud when it involves people who consciously decide to avoid leaving a digital footprint means doing it the old-fashioned way: Making direct contact with all parties. Even in this age of databases, analytics, and metrics, sometimes an investigation requires knocking on doors and tracking down old acquaintances, employers, family members, and former addresses.

In our case, we eventually found the driver and were able to facilitate his appearance for depositions. However, the case became a cautionary tale. A 22-year-old with no digital footprint is unusual, but as society becomes more connected via the Internet and cybercrimes gain notoriety, it also stands to reason that more people will exist in this gray area.

This means investigators increasingly will be challenged to dig deeper and utilize more unorthodox methods. Ultimately, intertwining high-tech with old-fashioned methods may very well become the norm, and not the exception.  

About The Authors
Dwight Geddes

Dwight Geddes is the head of Metro Claims Mgmt NYC Inc. dwight@metroclaimsnyc.com

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CLM’s Insurance Fraud Committee identifies, analyzes, and offers education on emerging fraud schemes and tactics; monitors and reports on developments in case law, state fraud statutes and applicable regulations; collaborates with other anti-fraud industry organizations and associations; and seeks to provide amicus support in matters of importance in the fight against insurance fraud.

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