As Virus Spreads, So Do Fraudsters – And The Data To Battle Them

This week in payments can be summed up, of course, in one word:

Coronavirus, of course.

The headlines fly fast and furious, and new cases of infections are popping up with speed. The numbers show an epidemic, likely a pandemic – and as the virus spreads, so does another virus of sorts: financial fraud.

The best offense, they say, is defense – and the best defense in doing battle with viruses and (human) villains comes in the form of data.

In an interview with Karen Webster, Yinglian Xie, CEO and co-founder at DataVisor, said that artificial intelligence (AI) can help navigate what is, these days, unchartered territory. 

Generally speaking, said Xie, “in both the medical industry, as well as in the security industry, we use very similar models.” And those models, in tracking the COVID-19 propagation, can help set baselines and track the rate of contagion to forecast how the outbreak might grow over time. 

To some extent, Xie told Webster, “what we really need to know includes some basic parameters: how contagious is each person, and what’s the death rate? By using these and other approximators, we can somewhat accurately figure out the shape of the propagation.”

And with a nod toward containment measures, she said inputs such as weather can help pinpoint best efforts.

The data points are accumulating, said Xie, and can be fed into models that leverage artificial intelligence (AI) and machine learning (ML) to identify anomalies and assess probabilities. 

Even partial data is valuable, she maintained, as the information can be used to make assumptions and extrapolations to determine optimistic, base case and pessimistic scenarios.

“If you look at the virus outbreak model, there’s a period going up very rapidly. To some extent, the initial stage is very flat, and then there’s suddenly an outbreak and it eventually will die down,” Xie said.

Data as a defense mechanism against disease (to put it one way) also was in evidence in joint efforts announced this week between Alibaba, Ant Financial and the Chinese government to create a smartphone app feature that segments people into three categories — green, yellow or red — based on their medical conditions and travel history.  

Chinese citizens can sign up for the program through services like the Alipay wallet app.

As Xie said, “It’s interesting to see that a large company like Alipay [helping collect] data to actually predict” individual risk and help instill relative calm in the population. She noted that Alipay’s installed base of digital wallet users captures only a certain sample of the general population, but that the additional data points reflect a way to track the virus’ trajectory.

The Fraudsters

Where there’s confusion, panic and conflicting reports, there’s fraud. As Webster noted, when behavioral patterns change, fraudsters look to misdirect, misinform and make off with ill-gotten gains.

Xie pointed to an uptick in email phishing attacks and scams – promising hand sanitizers and masks, for example, if would-be victims would just send funds. 

Even relatively savvy individuals can get taken in. Webster pointed to the news this week – one with a silver lining – that “Shark Tank” star Barbara Corcoran was scammed out of roughly $400,000 through a phishing scam tied to a real estate renovation. She eventually got the money back, as the German bank that had been making the transfer decided to freeze the funds as they made their way to a bank account in China.  

“Attackers always adapt to different kinds of mechanisms, in ever-evolving patterns,” said Xie, adding that the scams are simply new variations of age-old practices, and that social engineering presents a particularly knotty challenge.

“That’s why reactive approaches are often very difficult, because we are always chasing after them and we need to be proactive,” she said.  That’s where ML and AI can help make a difference through rigorous authentication tests, she said, especially as more people move online in an age where the physical world seems so fraught with peril.  

“This is a good time to really reflect on the protection measures every organization has in place in this ‘digital era,’” Xie told Webster. “It’s the moment to make sure every organization has the foundations and the technologies in place to protect all of us.”