Why we're seeing fraud in the energy space
Energy deregulation and a focus on growth have led energy companies to embrace signups through various channels, including third-party brokers/affiliates and state-sponsored electric choice websites. These channels increase customer acquisition, but reduce the level of control energy providers have over who gets signed up and how they're signed up. Affiliates and brokers may be incentivized to maximize signups, whether they're legitimate or not.
Why do energy providers see so much fraud?
In the energy industry, as elsewhere, fraudsters employ various techniques.
One common MO involves exploiting referral programs. Fraudsters use stolen or synthetic identities to fraudulently sign up new accounts, collecting referral bonuses or rewards for signing up "new customers" who will never actually pay for service.
Another approach focuses on regions where consumers have a large number of options when it comes to energy providers. Here's how it works:
- Fraudsters offer consumers several months of power for a small fee.
- Fraudsters use stolen identities to sign up for an account with an energy provider, which is then linked to the consumer's address.
- Neither the fraudster nor the consumer pays the energy company for the power. Typically, it takes several months before an energy company disconnects the consumer's address.
- When the consumer receives a disconnection notice, they contact the fraudster, who repeats the process with a different energy provider.
How SentiLink can help
SentiLink partners with leading companies in varied industries, and as such, we can see fraudsters quickly move from opening a deposit account to getting a new phone to renting a new apartment to getting energy connected for their new apartment. This visibility, coupled with our advanced tools, enables our partners to more accurately identify fraud risks in real-time, so that partners can reduce their bad debt tied to fraud and improve their operational efficiency.
To test our solution's efficacy, most partners engage in a data study or live trial via our API. Based on the partner’s specific use case, we will recommend optimal score cutoffs, and can go deeper by investigating fraud rates by brand and acquisition channel.
We've observed significant differences in fraud rates across various acquisition channels and sub-brands in the utility space. This provides compelling evidence for the effectiveness of sophisticated predictive risk models, such as SentiLink scores, that can be customized by channel and brand.
To learn more about how SentiLink could help you stop identity fraudsters at the point of application, click here to book a call.
