GIS: The Newest Technology in Fraud Detection and Prevention

Fraud: It’s a practice most people typically associate with either the insurance industry, the financial sector, or both. The generalizations aren’t far off base, since fraudulent insurance claims total roughly $80 billion annually across the United States and Canada¹, and nearly $1.5 billion in identity theft-related financial losses were reported to the Federal Trade Commission within the past two years alone.²

The truth is that potential for some degree of fraud exists in any industry — manufacturers could encounter vendors submitting numerous claims for “stolen” tools and equipment, government agencies might fall victim to healthcare provider billing scams, etc.³ How fraud evidences itself may vary, but there is a constant that runs through all industries and potentially fraudulent activities: geography.

GIS: Informative and Predictive Fraud Detection

Geographic Information System (GIS) technology is being heralded as a “secret weapon” in fraud detection and, ultimately, fraud prevention. It leverages data that companies generally track in their ERP and CRM systems as a matter of course to find and fight fraud. How? GIS helps company management teams visualize how, where, and when fraud occurs — making it actionable rather than numbers on a spreadsheet.

There are literal applications of GIS technology, such as an insurance claims adjuster physically mapping weather patterns and storm damage to verify a homeowner’s insurance claim legitimacy. However, GIS is also instrumental in helping businesses monitor internal operations to detect fraud.

It’s a matter of spatial data analysis. GIS provides location-based insights that are both informative and predictive:

• GIS analytics inform businesses about fraud risk. Spatial data is key in shedding light on regional variations, anomalies, and other geographically linked factors that could indicate the presence of elevated fraud activity both externally and internally.
• GIS analytics help businesses predict where and when fraud may migrate. Having visual representations of historical GIS data paired with real-time data reveals patterns of activity within identified geographies. This gives businesses the advantage of getting ahead of fraud risk to stem its impact.

Fraud detection and prevention is only accomplished when companies decide to take action rather than chalk up money and time lost to fraud as the cost of doing business. GIS is a helpful tool to leverage existing CRM and ERP data to keep businesses in tune with fraudulent activity — and with what needs to be done. It’s just one of the innovative ways GIS data helps businesses make better decisions. Explore more in 7 Surprising Use Cases for GIS in 2020.
SOURCES
¹Coalition Against Insurance Fraud, By the numbers: fraud statistics, Undated
²Insurance Information Institute, Facts + Statistics: Identity theft and cybercrime, Undated
³Govloop, How GIS Works to Combat Fraud, Undated