Internet Insurance Fraud Rings

Transcription

1 Page 1 of 5 Date: Regarding: Internet Insurance Fraud Rings - Florida 2010 For Dissemination to Member Company SIUs and Law Enforcement Prepared By: Kathy Novak, Field Information Analyst Internet Insurance Fraud Rings This report reflects the use of the Internet by insurance fraud rings as observed by the NICB South Florida Major Medical Fraud Task Force. As seen in recent NICB cases, the Internet provides a unique opportunity for possible fraudulent activity as consumers buy insurance from on-line insurance companies. Internet purchasing removes face to face contact with purchasers and verification of documents and vehicles, thereby increasing opportunities for insurance fraud. In a recent NICB investigation (C /Task Force Alert-FL ), it was identified that a ring operating in the Miami, FL area was allegedly using the Internet to purchase policies on-line using stolen or unauthorized credit card information and electronic bank checks. In this scheme, common addresses were used to purchase the policies on-line. In addition, it was identified that some of these policies were allegedly used to stage automobile accidents and attend various area clinics to make false insurance claims. In another recent NICB investigation (C /Task Force Alert-FL ), it was also identified that a ring operating in the Miami, FL area was allegedly using the Internet to purchase insurance policies on-line with unauthorized electronic bank checks. Several common addresses were identified. Allegedly, the electronic checks have been drawn on accounts later found to be non-existent. This paper will address various schemes using the Internet as well as recommendations for combating such schemes. Insurance Fraud via the Internet As noted above, NICB case investigations and research have identified various ways the Internet is being used to commit insurance fraud. I. On-Line Application Fraud

2 Page 2 of 5 Much of the information written in this section can be found in the National Insurance Crime Training Academy (NICTA) course Online Application Fraud available to NICB Member Companies and Law Enforcement at On-line application fraud is defined as follows: Intentional, material misrepresentation of information for the purpose of committing insurance fraud over the Internet, either by supplying incorrect information on an application for an insurance policy or by omitting information which would otherwise affect rates, premiums, or the underwriting decision. Examples: Scheme with multiple addresses: Often during licensing and registration vehicle owners need proof of insurance to show financial responsibility in the case of a traffic stop or auto accident. A person may be able to fraudulently obtain proof of coverage without paying for it and also offer the deal to others. Using the same internet address, a person can purchase policies on-line for others who may not have the familiarity with computers or the on-line process. The person goes on-line using his address and fills out the insurance application for another, using an e- check as payment. The policy is provisionally approved by the online application system and proof of coverage is sent to the address. The check later bounces, but proof of coverage has already been received. Identity Theft Fraudsters will use false identities as they purchase policies and then later file false claims based on staged and caused accidents. An applicant, using stolen or otherwise false identification, obtains an auto policy online. By purchasing the policy online, the applicant does not have to show an agent a driver s license or other photo identification, and no real signature is required. The new policy-holder promptly runs into the vehicle of a third party, often carrying other people who are also part of the scheme. Paper Accident - In another variation of this scheme, an applicant may take out a policy of an older vehicle which may already be damaged, using a false or made-up identity. This is easier online because the applicant does not have to worry about inspection of the vehicle and discovery of preexisting damage. The accident does not really happen, except on paper. The incident is faked or orchestrated to simulate the results of a real accident; then a claim is submitted. The insured claims to be the victim of a hit-and-run accident. Police may be called to verify the damage. Multiple occupants will claim to have been in the vehicle at the time of the accident. The insured will file a claim for the damage of the vehicle. The insured and occupants will file claims for softtissue injuries suffered in the accident. Multiple Policies - In another variation of this scheme, an applicant may also use false identifiers and the convenience of the online application process to defraud several insurance companies at the same time. The applicant purchases several auto policies using the same vehicle but different sets of personal information. Then, by staging a theft or an accident, the applicant is able to collect not just once, but several times. Rate Evasion Fraudsters will provide a false address where the vehicle is stored or neglect to list certain drivers on the online application, in order to get a lesser rate quote. Claim fraud Fraudsters will attempt to get an online vehicle policy quickly after an accident so that it appears there was insurance coverage for the loss.

3 Page 3 of 5 II. Fake Insurance Cards Fake insurance cards can also be made or purchased over the internet. The NICB South Florida Major Medical Fraud Task Force has seen a rise in reports of the use of false auto insurance cards by South Florida drivers. To combat this fraud, the NICB is proactively working with local law enforcement agencies and the insurance industry in checkpoint operations in which police officers are validating the authenticity of insurance cards by calling in the information in to a command post, with participating Member Companies on stand-by to verify the policies. These operations have proven successful in identifying false insurance cards. The NICB has also issued Strategic Alerts, SA , SA and SA , for example, where websites have been identified that offer the ability to purchase fake insurance cards, forms, and receipts as novelty items. III. On-line Automotive Fraud The following website identifies another way the Internet can be used in fraud: The below was taken from the site: In another type of fraud, a fraudster contacts someone who has posted a vehicle for sale online, asking for the vehicle identification number (VIN) in order to check the accident record of the vehicle. However, the crook actually uses the VIN to make fake documentation for a stolen car, in order to sell it. Detecting Internet Fraud The NICB provides the below recommendations merely as a lead for further investigation, or for the proper detection and investigation of Internet insurance fraud. Most claims are legitimate, but some may be fraudulent. Therefore, it is appropriate to review all claims for possible fraud. These indicators, or fraud possibility factors, should help isolate those claims which merit closer scrutiny. No one indicator by itself is necessarily suspicious. Even the presence of several indicators, while suggestive of possible fraud, does not mean that a fraud has been committed. Indicators of possible fraud are not evidence that fraud has occurred. The following was taken from the NICB indicators on Indicators of Internet/Online Application Fraud. Concerning the Online Application: Minimal and/or incomplete information provided. Refuses to provide social security information or provides false social security information. Significant changes to personal information from online quote to online quote. Name in address differs from name of insured. Multiple applications/polices utilizing the online application process in force. Multiple policies sold to the same mailing address. Multiple policies sold to the same phone number. Same vehicle on multiple policies. Same or similar addresses on multiple policies. Phone numbers disconnected or never in service.

4 Page 4 of 5 Phone number area code does not match address area code or zip code. Age inconsistent with occupation and/or education. Invalid driver s license number. Vehicles registered to individuals not on the application or policy. Health insurance is listed as primary with no health insurer identified. Insures more vehicles than identified drivers. Unreported drivers and/or household residents. Reports significant coverage with prior insurer, but purchases very minimal coverage. Address is a high rise apartment complex, but no apartment # is listed. Insured s name on personal lines policy has wording inconsistent with personal lines policy, such as co., inc. or any non-name wording. P.O. Box address used on policy matches list of known mail drops. Same social security numbers on multiple policies. Youthful driver insures high value vehicle. Youthful driver insures vehicle with high limits of liability. Youthful driver insures vehicle with no deductible for comprehensive/collision. Older vehicle insured with no deductibles for comprehensive/collision. Vehicle garaging address does not match mailing address or driver s license address. New vehicle with no lien holder. Customer initially quotes a commercial policy then later buys a personal lines policy for the same vehicle. Concerning Payment: Credit card information does not match policy holder s personal information (on single policy or multiple policies). Multiple payments in first 30 days. Multiple payments from different sources (i.e, initial payment EFT, another payment credit card or EFT from a different bank account). Electronic (E) checks are returned for NSF and/or incorrect routing or account numbers (also applies to paper checks). Multiple online quotes prior to purchase. Same bank account information on multiple policies with different named insureds. Personal lines policy paid for with routing number/account number of a corporate bank account (and vice versa). Significant electronic overpayment made (the scheme is to get a refund issued before the original check is returned for NSF); or, pay policy in full online or by phone, then cancel the policy within days of inception (the scheme is to get a refund issued before the original payment is returned). Using bank information from accounts that are invalid, frozen accounts, not authorized or no account unable to locate. Customer uses a Mailbox Warehouse (these are companies that are paid to forward mail that is delivered to their company address). Concerning Technical/Computer Issues: Multiple policies from the same IP address. Multiple policies sold under the same cookie. IP address geographical location does not match corresponding telephone number geographical location/area code (indicator of rate evasion).

5 Page 5 of 5 IP address geographical location does not match applicant s stated geographical address/zip code (indicator of rate evasion). IP address geographical location does not match geographical location indicated by the applicant s driver s license number (indicator of rate evasion). Potential customer s computer blocks cookies (possibly a very security conscious person or a person attempting to avoid having their computer identified). IP address is assigned to a public computer (e.g. libraries, Internet cafes, hotels, etc.).