Restoring Consumer Confidence: The case for a collaborative coalition in the fight against fraud


Jackie Barwell
Head of Product at ReD

High-profile, large-scale data breaches at major retailers, as well as the increasing ingenuity of fraudsters, continue to shake consumer confidence in retailers and financial institutions. A recent study conducted by ACI Worldwide and Aite Group, which surveyed 6,100 consumers across 20 countries, demonstrates the challenge that these organisations have ahead of them in re-building consumer confidence.

The survey found that:

  • 29% of global consumers do not trust merchants to protect stored personal and financial data against hacking attempts and data breaches.
  • 45% of consumers feel that stores do not use security systems that adequately protect their financial data against hackers and data breaches; and 38% believe that online shopping websites do not adequately protect this information.
  • 23% of consumers have changed financial institutions due to dissatisfaction after experiencing fraud.
  • 43% who received replacement cards as a result of a data breach or fraudulent activity use their new cards less than they used the originals.

This lack of consumer confidence threatens an immediate and long-term impact on customer loyalty, revenue and fee income.

To address these concerns and make real progress in combating fraud, financial institutions and retailers must take a more proactive role, not only by investing in fraud prevention and educating consumers about preventative measures, but also by working together as a collaborative coalition in the battle against fraud.

The data elements of a transaction — things like IP address, device ID, telephone number, card number, delivery, shipping and billing addresses — are not all held by any one party in the payments chain. An individual retailer or bank does not have a holistic view of the transaction, making it difficult for them, individually, to determine whether that transaction is genuine or suspicious. By sharing data — between retailers, or between retailers and banks — through initiatives such as the ReD Fraud Xchange and RFX Club, we can have a real impact on the effectiveness of fraud prevention. We can help each other to identify fraud attacks more quickly, highlight fraud trends and take fast, effective preventative measures.

In this way, we can reduce fraud losses and, most importantly, regain the trust, loyalty and confidence of consumers, ensuring that the only loser is the fraudster.

In the spirit of International Fraud Awareness Week we would encourage every retailer and financial institution to look at ways to support collaboration across the payments chain to share intelligence and work together in shutting down fraud.

Executive to Whistleblower: "Don't Give Me That Ethics Crap!"


Emily Primeaux
Assistant Editor, Fraud Magazine

When I moved to Austin at the start of the year, I immediately set out to find new establishments that provide services I use frequently: a local dry cleaner, hair salon, grocery store, post office, etc. Finding a local doctor also always ranks high on my list when I move to a new place. And I’ve moved many times.

The most important criterion I look for in a primary care physician is simply that they are well respected and have positive reviews from friends or other patients. Should anything happen to my health, I want to know I’m in capable and experienced hands.  

Health care fraud is a sensitive subject, because its prevalence means people like me can suffer at the hands of an irresponsible few. I recently spoke with Robert Church, CFE, FCPA, CVA, Director of Healthcare Investigations at Forensic Strategic Solutions, about a healthcare fraud scheme that took place at DaVita Healthcare Partners in Colorado. DaVita, a provider of kidney dialysis services, was accused of paying for referrals from physicians, which federal law prohibits. As Church explained, when a company pays a provider practice group or a physician for patient referrals, it becomes more about the money than the patients’ well being. Needless to say, this is exactly what I don’t look for in a new doctor.

Church’s extensive knowledge of the case revealed some pretty deplorable information. A former whistleblower himself, Church jumped right in to explain the discovery of the fraud by David Barbetta, a former financial analyst at DaVita, who worked in their mergers and acquisitions group. According to Church, when Barbetta discovered the fraud, he went to his bosses, but was rebuked at every opportunity when he discussed his findings with upper management. Per reports on the case, one executive even told him, “Don’t give me that ethics crap.” Frustrated and angry, Barbetta knew it was time to leave the company and file a claim with the authorities.

Church went on to explain that Barbetta came to authorities with spreadsheets of sales, emails, and insight into the company and its operations. These showed that DaVita was involved in three fraud schemes:

  • They allowed physicians to be a part of joint ventures with DaVita and kidney dialysis centers across the country. They then shared that ownership interest at a lower price than fair market value.
  • They bought dialysis centers by acquiring them from referring physicians at a value that was in excess of fair market value.
  • Finally, to ensure physicians received as much cash as possible, they manipulated the books and records of these joint ventures to squeeze out as much money as they could. One exec even referred to it as a “money bag for physicians.”

As Church discussed, having a whistleblower was crucial when it came time to find the information the fraud examiners needed to break the case open. However, it’s the lessons learned that fraud examiners should consider. “Fraud and health care can exist at all levels and in a host of ways. There is no single way to commit fraud in the health care industry,” says Church. “Companies that are bottom-line-only oriented or cash oriented will go to great lengths to both commit the fraud and cover it up.”

In DaVita’s case, they recently paid $389 million to settle criminal and civil anti-kickback investigations and ended joint ventures with kidney doctors at 28 dialysis clinics. “Eyes open is the order of the day,” says Church. “Recognize that schemes can take a host of avenues to get a company to the end result.”

To hear the entire interview with Robert Church, visit

The Right Tools for a Fraud Examination: Do you have a 'fraud response' bag?


Stephen Pedneault, CFE, CPA, CFF

In any trade, a technician needs the right tools for a job. Knowledge built upon education, training and experience provides the needed skills. But without the right tools, a technician can only conceptualize the job at hand.

For example, an electrician completes specialized schooling, works as an apprentice, passes exams and ultimately obtains a license — all while working in the trade to gain experience.

However, the two most decisive factors that directly influence the electrician's successful career will be: 1) the ability to determine the best electrical solution for each situation, and 2) the tools within his toolbox. Without a voltmeter, cordless drill, wire cutters and other tools, the electrician can't start — let alone finish — the job.


Of course, a fraud examiner also can't complete an examination without the right tools.

An accounting firm once called my office with a potential issue involving one of their clients — a local distributor of products to global customers. We immediately arranged a meeting for that afternoon.

I thought about the skills and tools I would bring to the discussion — even though I wouldn't need them right away — to ensure my office could react to the potential client issue. From the little I gleaned from the call, the potential matter involved an employee who held a financial position with the company.

I expected to encounter some type of theft, abuse or embezzlement. So, I prepared my usual basic toolbox (actually a briefcase), which includes a tablet computer with applications for taking notes and recording the meeting in audio and video. I also bring a spiral-bound notebook in case the tablet malfunctions.

I also always carry in my car a "fraud response" bag — an oversized briefcase containing miscellaneous items dedicated to fraud examinations. It contains the tools I need to safeguard and collect physical and electronic evidence: evidence bags, "evidence" tape to seal boxes or cabinets, static bags, USB jump drives, evidence markers and a digital camera. Because I never know when I'll receive my next fraud case or where I'll be when it does I always carry the bag.

Of course, no single fraud examiner possesses every hypothetical skill and tool needed to resolve a client matter. We must possess the ability to know what else we'll need and how to get other qualified individuals involved, such as:

  • Computer forensic experts.
  • Handwriting experts.
  • Surveillance and personal protection specialists.
  • Translators.

Most of these associates and I possess a similar mindset, and they're ready to respond to my call for help.

Read the full article from Stephen on