Without clear, detailed documentation supporting each decision, administrators risk losing the confidence of courts, claimants, and other stakeholders. This is where a robust fraud analysis backup becomes essential.
The Importance of Backup Data and the Role of Deduction Codes
To prove the integrity of fraud analysis, claims administrators should ensure they maintain backup data related to each claim determination. Backup data serves as the digital footprint of every decision, capturing not only whether a claim passed or failed fraud checks but also the specific reasons why. Deduction codes can enhance this transparency by providing a clear, standardized explanation for each outcome.
Based on ClaimScore’s approach, every claim that enters the fraud detection process starts with a score of 1,000 and loses points when indicators of fraud are found. When a fraud indicator is flagged, that claim is tagged with a deduction code that provides transparency into which criteria caused the claim to lose points. Claims with a score below 700 are flagged as fraudulent.
For example, a claim that was submitted with an email address associated with a domain that does not have proper MX records, will be tagged with the deduction code InvalidEmail. Or a claim submitted from an IP Address from a known bot network will be tagged with the deduction code FlaggedIP. Although neither of these infractions alone would cause a claim to drop below a score of 700, once a combination of those and/or other deductions results in the score dropping below 700 each infraction is documented, to provide insight into why the claim was marked as fraudulent. These data points offer clarity for each rejected claim and enable stakeholders to understand the rationale behind every decision, fostering trust in the fraud detection process.
Explainable Results: Building Stakeholder Confidence
When fraud rejection rates are exceptionally high, skepticism is inevitable. Stakeholders, including judges, settlement parties, and auditors, will want to know how such conclusions were reached. Explainable results—backed by well-documented backup data—are the answer.
By providing granular detail on why each claim was deemed valid or fraudulent, administrators can offer compelling evidence that their fraud detection process is thorough, fair, and consistent. This level of transparency not only satisfies immediate inquiries but serves as a safeguard against future challenges, reducing the risk of litigation or reputational damage.
In one recent case, a judge raised concerns about a fraud detection process that rejected more than 98% of claims, the sheer volume of which seemed implausible. However, the claims administrator presented a declaration detailing their approach, supported by ClaimScore’s methodology. Each rejected claim was accompanied by an array of deduction codes explaining its failure to pass fraud checks, ensuring the fraud detection process was both transparent and defensible.
This level of documentation turned the tide, and the judge ultimately deemed the process fair and adequate. As a result, the case received final approval, reinforcing the importance of a robust fraud analysis backup.
The Takeaway: Documentation Is Non-Negotiable
Fraud prevention in class action claims can be complex and high-stakes. With advanced algorithmic tools making decisions, it is key to provide documentation of the technology’s process and outputs. Maintaining backup data and providing explainable results through deduction codes ensures transparency, builds trust, and fortifies the fraud detection process against scrutiny.
In today’s environment of heightened fraud risks and increased accountability, a strong fraud analysis backup is not just a best practice—it’s a necessity. By prioritizing transparency and detailed documentation, claims administrators can confidently navigate even the most challenging cases.
