How The Real Estate Industry Can Simplify The Investment Process

For generations, real estate has proven to be a successful way to build wealth in America. People buy a home, often build equity over time, then sell their home.

CNBC reported in December that close to 95,000 homes were flipped in the third quarter of 2021, an increase for the second quarter in a row. In the past, buying single-family homes, fixing them up and selling them at a profit has largely been the purview of those with access to capital and privy to hard-to-obtain information, such as accurate data on home valuations and the true costs of conducting repairs. These acted as barriers to entry.

My company uses the power of data and technology to bring lending for real estate investors into the digital age, and I’ve observed technology has ushered dramatic changes into the market in recent years. If the real estate industry is to continue to grow and welcome groups of investors who have traditionally been walled out, I believe key stakeholders must continue to rid the home-buying process of high fees, needless complexity and inefficiencies, as well as expand access to capital.

Artificial intelligence is already creating change among lenders.

Buying a home obviously requires money, and that typically means acquiring a loan. To do that, an investor usually needs a good credit score. FICO is one of many ​​ways lenders assess someone’s creditworthiness. Most measure factors such as someone’s level of debt, credit history, the type of credit used and new credit accounts. For years, critics have questioned whether FICO is an accurate way to predict someone’s ability to pay back a loan.

In recent years, more and more lenders have turned to alternative means to measure creditworthiness, my company included. The rise of artificial intelligence has begun to create massive change. The ability to find alternative ways to determine credit risk could open more doors to groups who have not always received a fair credit evaluation.

That said, much has been written about the problem of introducing bias into these AI algorithms. While I believe AI is still a good option, it is still important to consider some challenges associated with using AI in the lending process.

For example, AI-based engines exhibit many of the same biases as humans because they were trained on biased credit decisions and historical inequities in housing and lending markets data. In order to address these inequities, AI-based engines should be designed to encourage greater equity, rather than try to align with previous credit decisions. Lenders can achieve this by removing bias from data before a model is built, which includes eliminating model variables that directly or indirectly create fair lending disparities.

Moreover, it’s important to add more constraints to the model so that it can encourage equity. For example, these constraints can reduce the difference in outcomes for people in different zip codes who have the same risk profile. If AI-based engines are left unchecked, they can reinforce the inequities that lenders want them to eliminate.

There’s still more to be done.

Buying a home is a stressful process; identifying the right market, finding a home that fits the investor’s criteria, getting financing and closing on time can be challenging. An investor needs to study the market by researching statistics in the area, including housing prices, housing inventory, listing prices and days on the market. In addition, one must get prices for renovation materials and identify the ​​right contractors. As such, investors need adequate tools to analyze different markets and deals.

Years ago, determining a home’s value required a real estate agent. Along with large institutional investors, agents were primarily the only ones with access to this information on a large scale. Now, technology has leveled the playing field, and a real estate investor can log on to Zillow, Redfin or similar sites and learn about price, value and trends regarding nearly any property in the country. This has simplified the buying process, but more needs to be done. Here are a few areas the real estate industry could work to address:

• Developing a better experience for virtual walkthroughs: Today, there are solutions that allow for virtual inspections to avoid the hassle of scheduling an in-person visit, which can be challenging, particularly if the property is out of state. But there is an opportunity to further streamline the process by leveraging technology. Virtual reality headsets showed early promise but haven’t taken off as expected, and there’s a significant need to improve the way to get an on-the-scene feeling for a property without spending the time and money to visit in person.

• Providing more digital tools and products: Tackling the different steps and paperwork involved with buying requires a degree of know-how. For real estate investors, speed is crucial, as an investor might be in the process of acquiring multiple properties at the same time while competing with other investors. It can be cumbersome and tedious to manage the paperwork for multiple properties at the same time. For this reason, companies in the real estate space can also aim to create technology that further streamlines the process, provides transparency every step of the way and helps scale.

The area is ripe for disruption. The goal for the players in the real estate industry should be to make the process of buying and selling a home much more akin to buying and selling a car. If we do that, we can truly transform the real estate industry.

Source: How The Real Estate Industry Can Simplify The Investment Process

More contents:

How Much Liquidity Does Your Portfolio Need During Ages 30, 40, 50, 60+

The global market’s volatility and increasing inflation is likely a cause for concern as you manage your portfolio.  With these challenges, it’s advisable to incorporate liquidity into your planning.

Liquidity is described as the amount of cash you can readily access, or how quickly you can convert assets to cash. The need for liquidity can vary depending on your age and risk tolerance, and short and long term financial goals. We’ve asked financial experts for their advice about how to plan your liquidity strategy as you age.

Liquid emergency savings for unforeseen life events

According to financial experts, you should have about six months of liquid living expenses set aside in an emergency fund, if you encounter a job loss, experience a medical emergency or have a sudden expense like a car repair.

“At any age we recommend an emergency fund in cash or cash investments to cover roughly six-month expenditures.”

“At any age we recommend an emergency fund in cash or cash investments to cover roughly six-month expenditures,” says Rob Williams, CFP®, CRPC®, managing director, financial planning, retirement income and wealth management, Schwab Center for Financial Research. “They can cover a one-time surprise expense or tide you over if you have an illness, change jobs, or have another expense, to help avoid the need to sell investments.”

How your age factors in on your liquidity path

According to Williams, investors aged 30 to their early 60s and still working and who do not need money from their portfolio soon could start with around 5% of their portfolio in cash and cash investments, based on the time horizon and risk tolerance.

And, for investors nearing retirement, when they may need to start tapping their portfolio, or another goal, such as paying for a child’s education, may want to hold a higher proportion in cash and cash investments in their portfolio, Williams says.

“We suggest, generally, that investors hold the next year of money that they may need to withdraw from a portfolio, to pay for a goal or expense in cash or cash investments.”

“We suggest, generally, that investors hold the next year of money they may need to withdraw from a portfolio, to pay for a goal or expense, in cash or cash investments,” Williams explains. “This is a good guideline, to determine how much you might want to hold based not just on your age, but your goals as well.”

How goals can influence your decade-by-decade liquidity decisions

John Pilkington, CFP, senior financial advisor with Vanguard Personal Advisor Services, also recommends setting aside 3-6 months’ worth of expenses in an emergency fund, and, given an individual’s or couple’s lifestyle and financial goals, he advises to consider how liquid reserves fit into a broader financial plan.

“For example, if someone is in their early 40s and is planning a significant purchase, such as a vacation property, in the near future, they will have significantly higher liquidity needs than someone of the same age who is only saving for longer term goals,” he says.

Other factors that can impact your need for liquidity could be financing a child’s education or creating a retirement plan.

“Typically, those in their 30s and 40s have competing financial goals – think paying down a mortgage, student loans, saving for children’s future college expenses, saving for retirement – and therefore have a higher need for liquidity should they need to tap funds amid planning other financial obligations,” Pilkington says.

As he mentioned,  a challenge that many in these 30s to 40s decades face is the ability to create liquid reserves, as their competing goals are co-existing among higher debt burdens.

“This audience can benefit from looking at alternative sources of liquidity – such as a home equity line of credit, tapping a Roth IRA, or a personal loan,” adds Pilkington.

Source: How much liquidity does your portfolio need during ages 30, 40, 50, 60+ ? | Fox Business

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Critics:

Liquidity becomes even more critical to consider in the context of an investor’s financial goals. For most, goals can be described most simply as certain amounts of money needed at particular points in time. However, when the time comes, investors will likely need to fund their goals in the form of cash, rather than in the form of financial securities or art.

Of course, exceptions exist for example, a charitable donation of stock or repurposing a piece of real estate investment property to serve as a retirement home. Your financial advisor has the tools and resources to incorporate your financial goals into your long-term plan. To illustrate this, consider a goal of funding a child’s university education. For most, this involves multiple payments of cash over the course of a few years at some point in the future.

When the tuition due-date nears, the portfolio of securities would likely need to become less risky, more stable, more liquid, and more accessible in order to ensure the tuition payment clears. The graph below depicts a hypothetical example of how the cash required over the child’s age increases as he approaches his college education years – requiring strategic planning for liquidity needs.

Especially in the case of relatively large financial goals such as funding higher-education, the chances that your goals become a reality can be improved by starting early, having a long-term focus, and putting a plan in place with your financial advisor.

More contents:

Liquidity – Dictionary Definition of Liquidity”. About.com Education. Archived from the original on 17 April 2015. Retrieved 27 May 2015.

Keynes, John Maynard. A Treatise on Money. Vol. 2. p. 67.

TradeLive”. TradeLive.in. Archived from the original on 26 December 2017. Retrieved 27 May 2015.

The Performance of Liquidity in the Subprime Mortgage Crisis” (PDF). New Political Economy. 15 (1): 71-89. doi:10.1080/13563460903553624. S2CID 153899413.

Mifid ushers in a new era of trading”. Financial Times. Retrieved 27 May 2015.

Understanding Financial Liquidity”. Investopedia.com. Investopedia US. Archived from the original on 3 May 2018. Retrieved 11 August 2014.

Why Stocks Are Rising: It’s The Liquidity, Stupid!”. Yahoo Finance. Archived from the original on 1 June 2013. Retrieved 11 August 2014.

Liquidity: Finance in motion or evaporation”, lecture by Michael Mainelli at Gresham College, 5 September 2007 (available for download as an audio or video file, as well as a text file)

The role of time-critical liquidity in financial markets by David Marshall and Robert Steigerwald (Federal Reserve Bank of Chicago)

Financial market utilities and the challenge of just-in-time liquidity

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Fighting Identity Theft With The Red Flags Rule

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An estimated nine million Americans have their identities stolen each year. Identity thieves may drain accounts, damage credit, and even put medical treatment at risk. The cost to business — left with unpaid bills racked up by scam artists — can be staggering, too.

The Red Flags Rule1 requires many businesses and organizations to implement a written identity theft prevention program designed to detect the “red flags” of identity theft in their day-to-day operations, take steps to prevent the crime, and mitigate its damage. The bottom line is that a program can help businesses spot suspicious patterns and prevent the costly consequences of identity theft.

The Federal Trade Commission (FTC) enforces the Red Flags Rule with several other agencies. This article has tips for organizations under FTC jurisdiction to determine whether they need to design an identity theft prevention program.

An Overview

The Red Flags Rule tells you how to develop, implement, and administer an identity theft prevention program. A program must include four basic elements that create a framework to deal with the threat of identity theft.2

  1. A program must include reasonable policies and procedures to identify the red flags of identity theft that may occur in your day-to-day operations. Red Flags are suspicious patterns or practices, or specific activities that indicate the possibility of identity theft.3 For example, if a customer has to provide some form of identification to open an account with your company, an ID that doesn’t look genuine is a “red flag” for your business.
  2. A program must be designed to detect the red flags you’ve identified. If you have identified fake IDs as a red flag, for example, you must have procedures to detect possible fake, forged, or altered identification.
  3. A program must spell out appropriate actions you’ll take take when you detect red flags.
  4. A program must detail how you’ll keep it current to reflect new threats.

Just getting something down on paper won’t reduce the risk of identity theft. That’s why the Red Flags Rule has requirements on how to incorporate your program into the daily operations of your business. Fortunately, the Rule also gives you the flexibility to design a program appropriate for your company — its size and potential risks of identity theft. While some businesses and organizations may need a comprehensive program to address a high risk of identity theft, a streamlined program may be appropriate for businesses facing a low risk.

Securing the data you collect and maintain about customers is important in reducing identity theft. The Red Flags Rule seeks to prevent identity theft, too, by ensuring that your business or organization is on the lookout for the signs that a crook is using someone else’s information, typically to get products or services from you without paying for them.

That’s why it’s important to use a one-two punch in the battle against identity theft: implement data security practices that make it harder for crooks to get access to the personal information they use to open or access accounts, and pay attention to the red flags that suggest that fraud may be afoot.

Who Must Comply with the Red Flags Rule: A Two-Part Analysis

The Red Flags Rule requires “financial institutions” and some “creditors” to conduct a periodic risk assessment to determine if they have “covered accounts.” The determination isn’t based on the industry or sector, but rather on whether a business’ activities fall within the relevant definitions. A business must implement a written program only if it has covered accounts.

Financial Institution

The Red Flags Rule defines a “financial institution” as a state or national bank, a state or federal savings and loan association, a mutual savings bank, a state or federal credit union, or a person that, directly or indirectly, holds a transaction account belonging to a consumer.4 While many financial institutions are under the jurisdiction of the federal bank regulatory agencies or other federal agencies, state-chartered credit unions are one category of financial institution under the FTC’s jurisdiction.

Creditor

The Red Flags Rule defines “creditor” based on conduct.5

To determine if your business is a creditor under the Red Flags Rule, ask these questions:

Does my business or organization regularly:

  • defer payment for goods and services or bill customers?
  • grant or arrange credit?
  • participate in the decision to extend, renew, or set the terms of credit?

If you answer:

  • No to all, the Rule does not apply.
  • Yes to one or more, ask:

Does my business or organization regularly and in the ordinary course of business:

  • get or use consumer reports in connection with a credit transaction?
  • give information to credit reporting companies in connection with a credit transaction?
  • advance funds to — or for — someone who must repay them, either with funds or pledged property (excluding incidental expenses in connection with the services you provide to them)?

If you answer:

  • No to all, the Rule does not apply.
  • Yes to one or more, you are a creditor covered by the Rule.

Covered Accounts

If you conclude that your business or organization is a financial institution or a creditor covered by the Rule, you must determine if you have any “covered accounts,” as the Red Flags Rule defines that term. You’ll need to look at existing accounts and new ones6.  Two categories of accounts are covered:

  1. A consumer account for your customers for personal, family, or household purposes that involves or allows multiple payments or transactions.7 Examples are credit card accounts, mortgage loans, automobile loans, checking accounts, and savings accounts.
  2.  “Any other account that a financial institution or creditor offers or maintains for which there is a reasonably foreseeable risk to customers or to the safety and soundness of the financial institution or creditor from identity theft, including financial, operational, compliance, reputation, or litigation risks.”8 Examples include small business accounts, sole proprietorship accounts, or single transaction consumer accounts that may be vulnerable to identity theft. Unlike consumer accounts designed to allow multiple payments or transactions — always considered “covered accounts” under the Rule — other types of accounts are “covered” only if the risk of identity theft is reasonably foreseeable.

In determining if accounts are covered under the second category, consider how they’re opened and accessed. For example, there may be a reasonably foreseeable risk of identity theft in connection with business accounts that can be accessed remotely — say, through the Internet or the telephone. Your risk analysis must consider any actual incidents of identity theft involving accounts like these.

If you don’t have any covered accounts, you don’t need a written program. But business models and services change. You may acquire covered accounts through changes to your business structure, process, or organization. That’s why it’s good policy and practice to conduct a periodic risk assessment.

FAQs

  1. I review credit reports to screen job applicants. Does the Rule apply to my business on this basis alone? No, the Rule does not apply because the use is not “in connection with a credit transaction.”
  2. What if I occasionally get credit reports in connection with credit transactions?According to the Rule, these activities must be done “regularly and in the ordinary course of business.” Isolated conduct does not trigger application of the Rule, but if your business regularly furnishes delinquent account information to a consumer reporting company but no other credit information, that satisfies the “regularly and in the ordinary course of business” prerequisite.What is deemed “regularly and in the ordinary course of business” is specific to individual companies. If you get consumer reports or furnish information to a consumer reporting company regularly and in the ordinary course of your particular business, the Rule applies, even if for others in your industry it isn’t a regular practice or part of the ordinary course of business.
  3. I am a professional who bills my clients for services at the end of the month. Am I a creditor just because I allow clients to pay later?No. Deferring payment for goods or services, payment of debt, or the purchase of property or services alone doesn’t constitute “advancing funds” under the Rule.
  4. In my business, I lend money to customers for their purchases. The loans are backed by title to their car. Is this considered “advancing funds”?Yes. Anyone who lends money — like a payday lender or automobile title lender — is covered by the Rule. Their lending activities may make their business attractive targets for identity theft. But deferring the payment of debt or the purchase of property or services alone doesn’t constitute “advancing funds.”
  5. I offer instant credit to my customers and contract with another company to pull credit reports to determine their creditworthiness. No one in our organization ever sees the credit reports. Is my business covered by the Rule?Yes. Your business is — regularly and in the ordinary course of business — using credit reports in connection with a credit transaction. The Rule applies whether your business uses the reports directly or whether a third-party evaluates them for you.
  6. I operate a finance company that helps people buy furniture. Does the Rule apply to my business?Yes. Your company’s financing agreements are considered to be “advancing funds on behalf of a person.”
  7. In my legal practice, I often make copies and pay filing, court, or expert fees for my clients. Am I “advancing funds”?No. This is not the same as a commercial lender making a loan; “advancing funds” does not include paying in advance for fees, materials, or services that are incidental to providing another service that someone requested.
  8. Our company is a “creditor” under the Rule and we have credit and non-credit accounts. Do we have to determine if both types of accounts are “covered accounts”? Yes. You must examine all your accounts to determine which are “covered accounts” that must be included in your written identity theft prevention program.
  9. My business accepts credit cards for payments. Are we covered by the Red Flags Rule on this basis alone?No. Just accepting credit cards as a form of payment does not make you a “creditor” under the Red Flags Rule.
  10. My business isn’t subject to much of a risk that a crook is going to misuse someone’s identity to steal from me, but it does have covered accounts. How should I structure my program?If identity theft isn’t a big risk in your business, complying with the Rule is simple and straightforward. For example, if the risk of identity theft is low, your program might focus on how to respond if you are notified — say, by a customer or a law enforcement officer — that someone’s identity was misused at your business. The Guidelines to the Rule have examples of possible responses. But even a business at low risk needs a written program that is approved either by its board of directors or an appropriate senior employee.

How To Comply: A Four-Step Process

Many companies already have plans and policies to combat identity theft and related fraud. If that’s the case for your business, you’re already on your way to full compliance.

1. Identify Relevant Red Flags

What are “red flags”? They’re the potential patterns, practices, or specific activities indicating the possibility of identity theft.9 Consider:

Risk Factors. Different types of accounts pose different kinds of risk. For example, red flags for deposit accounts may differ from red flags for credit accounts, and those for consumer accounts may differ from those for business accounts. When you are identifying key red flags, think about the types of accounts you offer or maintain; the ways you open covered accounts; how you provide access to those accounts; and what you know about identity theft in your business.

Sources of Red Flags. Consider other sources of information, including the experience of other members of your industry. Technology and criminal techniques change constantly, so it’s important to keep up-to-date on new threats.

Categories of Common Red Flags. Supplement A to the Red Flags Rule lists specific categories of warning signs to consider including in your program. The examples here are one way to think about relevant red flags in the context of your own business.

  • Alerts, Notifications, and Warnings from a Credit Reporting Company. Changes in a credit report or a consumer’s credit activity might signal identity theft:
    • a fraud or active duty alert on a credit report
    • a notice of credit freeze in response to a request for a credit report
    • a notice of address discrepancy provided by a credit reporting company
    • a credit report indicating a pattern inconsistent with the person’s history B for example, an increase in the volume of inquiries or the use of credit, especially on new accounts; an unusual number of recently established credit relationships; or an account that was closed because of an abuse of account privileges
  • Suspicious Documents. Documents can offer hints of identity theft:
    • identification looks altered or forged
    • the person presenting the identification doesn’t look like the photo or match the physical description
    • information on the identification differs from what the person with identification is telling you or doesn’t match a signature card or recent check
    • an application looks like it’s been altered, forged, or torn up and reassembled
  • Personal Identifying Information. Personal identifying information can indicate identity theft:
    • inconsistencies with what you know — for example, an address that doesn’t match the credit report or the use of a Social Security number that’s listed on the Social Security Administration Death Master File
    • inconsistencies in the information a customer has submitted to you
    • an address, phone number, or other personal information already used on an account you know to be fraudulent
    • a bogus address, an address for a mail drop or prison, a phone number that’s invalid, or one that’s associated with a pager or answering service
    • a Social Security number used by someone else opening an account
    • an address or telephone number used by several people opening accounts
    • a person who omits required information on an application and doesn’t respond to notices that the application is incomplete
    • a person who can’t provide authenticating information beyond what’s generally available from a wallet or credit report — for example, someone who can’t answer a challenge question
  • Account Activity. How the account is being used can be a tip-off to identity theft:
    • shortly after you’re notified of a change of address, you’re asked for new or additional credit cards, or to add users to the account
    • a new account used in ways associated with fraud — for example, the customer doesn’t make the first payment, or makes only an initial payment; or most of the available credit is used for cash advances or for jewelry, electronics, or other merchandise easily convertible to cash
    • an account used outside of established patterns — for example, nonpayment when there’s no history of missed payments, a big increase in the use of available credit, or a major change in buying or spending patterns or electronic fund transfers
    • an account that is inactive is used again
    • mail sent to the customer that is returned repeatedly as undeliverable although transactions continue to be conducted on the account
    • information that the customer isn’t receiving an account statement by mail or email
    • information about unauthorized charges on the account
  • Notice from Other Sources. A customer, a victim of identity theft, a law enforcement authority, or someone else may be trying to tell you that an account has been opened or used fraudulently.

2. Detect Red Flags

Sometimes, using identity verification and authentication methods can help you detect red flags. Consider whether your procedures should differ if an identity verification or authentication is taking place in person, by telephone, mail, or online.

  • New accounts. When verifying the identity of the person who is opening a new account, reasonable procedures may include getting a name, address, and identification number and, for in-person verification, checking a current government-issued identification card, like a driver’s license or passport.
  • Depending on the circumstances, you may want to compare that to information you can find out from other sources, like a credit reporting company or data broker, or the Social Security Number Death Master File.10 Asking questions based on information from other sources can be a helpful way to verify someone’s identity.
  • Existing accounts. To detect red flags for existing accounts, your program may include reasonable procedures to confirm the identity of the person you’re dealing with, to monitor transactions, and to verify the validity of change-of-address requests. For online authentication, consider the Federal Financial Institutions Examination Council’s guidance on authentication as a starting point.11
  • It explores the application of multi-factor authentication techniques in high-risk environments, including using passwords, PINs, smart cards, tokens, and biometric identification. Certain types of personal information — like a Social Security number, date of birth, mother’s maiden name, or mailing address — are not reliable authenticators because they’re so easily accessible.

You may be using programs to monitor transactions, identify behavior that indicates the possibility of fraud and identity theft, or validate changes of address. If so, incorporate these tools into your program.

3. Prevent And Mitigate Identity Theft

When you spot a red flag, be prepared to respond appropriately. Your response will depend on the degree of risk posed. It may need to accommodate other legal obligations, like laws about providing and terminating service.

The Guidelines in the Red Flags Rule offer examples of some appropriate responses, including:

  • monitoring a covered account for evidence of identity theft
  • contacting the customer
  • changing passwords, security codes, or other ways to access a covered account
  • closing an existing account
  • reopening an account with a new account number
  • not opening a new account
  • not trying to collect on an account or not selling an account to a debt collector
  • notifying law enforcement
  • determining that no response is warranted under the particular circumstances

The facts of a particular case may warrant using one of these options, several of them, or another response altogether. Consider whether any aggravating factors raise the risk of identity theft. For example, a recent breach that resulted in unauthorized access to a customer’s account records would call for a stepped-up response because the risk of identity theft rises, too.

4. Update The Program

The Rule recognizes that new red flags emerge as technology changes or identity thieves change their tactics, and requires periodic updates to your program. Factor in your own experience with identity theft; changes in how identity thieves operate; new methods to detect, prevent, and mitigate identity theft; changes in the accounts you offer; and changes in your business, like mergers, acquisitions, alliances, joint ventures, and arrangements with service providers.

Administering Your Program

Your Board of Directors — or an appropriate committee of the Board — must approve your initial plan.  If you don’t have a board, someone in senior management must approve it.  The Board may oversee, develop, implement, and administer the program — or it may designate a senior employee to do the job. Responsibilities include assigning specific responsibility for the program’s implementation, reviewing staff reports about compliance with the Rule, and approving important changes to your program.

The Rule requires that you train relevant staff only as “necessary.” Staff who have taken fraud prevention training may not need to be re-trained. Remember that employees at many levels of your organization can play a key role in identity theft deterrence and detection.

In administering your program, monitor the activities of your service providers. If they’re conducting activities covered by the Rule — for example, opening or managing accounts, billing customers, providing customer service, or collecting debts — they must apply the same standards you would if you were performing the tasks yourself. One way to make sure your service providers are taking reasonable steps is to add a provision to your contracts that they have procedures in place to detect red flags and either report them to you or respond appropriately to prevent or mitigate the crime. Other ways to monitor your service providers include giving them a copy of your program, reviewing the red flag policies, or requiring periodic reports about red flags they have detected and their response.

It’s likely that service providers offer the same services to a number of client companies. As a result, the Guidelines are flexible about service providers using their own programs as long as they meet the requirements of the Rule.

The person responsible for your program should report at least annually to your Board of Directors or a designated senior manager. The report should evaluate how effective your program has been in addressing the risk of identity theft; how you’re monitoring the practices of your service providers; significant incidents of identity theft and your response; and recommendations for major changes to the program.12

Source: Fighting Identity Theft with the Red Flags Rule: A How-To Guide for Business | Federal Trade Commission

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More contents:

Does AI Have The Answer To The Customer Experience Riddle?

The telecommunications industry is so many enterprises wrapped into one—they have to get every aspect of customer experience right. It’s a challenge every organization can learn from.

Everywhere you look, there’s another business attempting to harness data, analytics, and artificial intelligence to help them increase sales and crack the code to provide higher-quality, lower-cost goods and services.

Travel and hospitality companies want to make persuasive, personalized offers at just the right moment to drive bookings. Retailers are honing inventory management to better anticipate customer demand and drive same-store sales—while navigating the current supply chain challenges. Hospitals, health insurers, and even governments utilize AI to comb through vast data sets to develop predictive models of disease.

Financial institutions have accelerated credit and risk underwriting decisions using AI/ML models; they’ve also enhanced customer satisfaction online and on the phone with AI-driven virtual assistants. Manufacturers are employing AI to improve process efficiency, enable predictive maintenance, and scale quality control efforts in their core operations. And everyone is trying to reduce customer churn.

When you stop and think about it, the telecommunications industry and its myriad communications service providers (CSPs) do all of this—advertising, supply chain, online and physical stores, operations and maintenance, customer care—and more, for both consumers and businesses. Thus, CSPs offer a unique lens through which to examine how companies in any industry can utilize AI to convert data to insights and information to actions.

The pressure on CSPs to take action, to do more with less, has never been greater.

Growing demands on the network, growing demands for the network

CSPs are in an unusual position: As global demand for data has grown 256% between 2016 and 2020, intense competition has meant that revenues grew less than 13% over the same period. Operators have so far relied upon technical advances and gaining scale efficiencies through consolidation to manage the gap, but one of the greatest untapped opportunities remaining is to become dramatically better providers of customer service.

While the concept of “AI-driven customer service” may seem like an oxymoron—after all, what do algorithms really know about serving people better?—the answer now turns out to literally be more than you could ever know.

The decline of third-party cookies has many operators renewing their focus on collecting and acting upon their own first-party data across the customer lifecycle.

In an evolving industry like telecommunications, the race for customer acquisition and retention is paramount. This is driving heightened operator focus on better advertising performance and retail sales—whether in their own stores, their retailer partners, or various digital channels. AI can help here with informing target audience creation, creative optimization, and inventory forecasts.

Related: Google and Automation Anywhere reimagine customer experience by giving virtual agents a boost

The decline of third-party cookies has many operators renewing their focus on collecting and acting upon their own first-party data across the customer lifecycle. Here, too, AI models can help CSPs identify and act upon signals, such as usage patterns or customer care calls. This type of customer context, an often overlooked signal, can be especially valuable when it comes to identifying “at risk”’ customers for retention efforts.

Contact centers supporting upwards of 100 million subscribers are an expensive endeavor. Several top global operators have turned to conversational AI to decrease agent volumes and document AI tools to shorten call handle times. Some companies report Google’s conversational AI can cut the number of customer inquiries that need a human agent by half.  Besides helping reduce costs and maintain margins for the operator, many customers also appreciate the efficiency and control of self-service.

Furthermore, while CSPs may not have a “factory” in the traditional sense, their network operations are far-flung and national, even global, in scale. They must operate at the industry standard of “five 9’s” (i.e., 99.999%) reliability for emergency communications and simultaneously deliver massive amounts of bandwidth to meet the public’s insatiable demand for communications and data.

And if it seems like a lot now, just consider the 23% annual bandwidth growth the industry will undergo with the rise of 5G and all the IoT, VR, and Web3 experiences that come with it. Keeping up, and keeping customers happy, will take new levels of network automation and predictive maintenance that only AI can provide.

Related: Deploying and operating cloud-based 5G networks

TELUS, a world-leading communications technology company based in Canada, is already leveraging conversational AI through Google Cloud’s CCAI Insights to better serve its roster of global clients and their customers.

Read more:

Most Important Artificial Intelligence Skill: A Sense of Imagination

The Rise of Artificial Intelligence in Business and Society

How Artificial Intelligence Powered Customer Service Will Help Customer Support Agents

Artificial Empathy: Call Center Employees Are Using Voice Analytics to Predict How You Feel

“As a company that supports our customers through many channels, we are able to provide a streamlined experience that transitions from digital support to live agent support,” Phil Schultz, vice-president of customer experience, told us in an interview. “With this new experience, we are able to provide a simple, consistent, intuitive, and friendly experience for simpler tasks, with our agents being able to focus on supporting our customers’ more complex issues. CCAI and Data Insight help TELUS ensure our customers get the support they need, when they need it.”

Realizing the value of AI for customer experience

Of course all of these grand data aspirations are easy to articulate but hard to implement—at Google Cloud, we know these challenges first hand. It’s why we empathize with the added challenges CSPs face from their legacy systems, and from the network complexity that has arisen over generations of technology and industry consolidation. It’s also why we’re excited to be partnering with top CSPs to solve these challenges.

Through our experiences in these partnerships, Google Cloud has identified four key success factors for driving business value from AI applied across the customer experience:

  1. Clear Focus. Success starts with a clear and shared understanding of what CSPs are solving for and the business value of doing so. This clarity will drive every activity to follow, with the business value serving as an important motivator to plow through challenges.
  2. No Silos. Nearly all enterprises struggle with how to break down data silos. Successful companies have a proactive strategy for data integration, data management, and analytics platforms to address the current as well as future needs.
  3. Data-driven. Choosing which part of the problem to tackle first and how to do so is a major determinant of value. Leading companies rely on data to help inform their approach to everything from deciding which use cases to tackle first, to developing and optimizing AI-driven virtual assistants.
  4. Shared risk & reward. We have found that success takes a partnership in which incentives are aligned, with partners having skin in the game.

In Google Cloud’s new report, “Using AI to win the customer experience battle in telecommunications,” we delve into these dimensions, using CSPs as a vehicle, and examine new and innovative ways to apply AI, and best practices for building an AI program focused on delivering value, not just promises.

For TELUS, the investment of time and planning required to execute on AI was apparent from the start. “Through our 10-year partnership with Google, TELUS is able to dive into all the phases of our customers’ journey ensuring it is easy for them to get the support they need,” Schultz said. “This allows our customers to more easily service themselves online, and our world class agents to have all of the information they need to provide quicker and easier support to our customers.”

AI solutions offer the exciting potential to transform the customer experience and bend the value curve for enterprises. Realizing this value requires thoughtful preparation, technology excellence, iterative progress, and a committed, aligned partnership. No company—whether an operator, cloud provider, or solution provider—can afford to let the sizable program investment become just another hype-cycle science experiment that fails to deliver business results.

Sean Allbee, Senior Principal, Customer Value and Transformation Advisory, Google Cloud

Sean works with telecommunications and media companies

Amol Phadke joined Google Cloud in June 2020 as managing director: global telecom industry solutions. He is responsible for working with the product and

Source: Does AI Have The Answer To The Customer Experience Riddle?

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