When Computer-Based Profiling Goes Bad
Scary story of someone who was told by his bank that he’s no longer welcome as a customer, because the bank’s computer noticed a deposit that wasn’t “normal.”
After two written complaints and a phone call to customer services, a member of the “Team” finally contacted me. She enquired about a single international deposit into my account, which I then explained to be my study grant for the coming year. Upon this explanation I was told that the bank would not close my account, and I was given a vague explanation of them not expecting students to get large deposits. I found this strange, since it had not been a problem in previous years, and even stranger since my deposit had cleared into my account two days after the letter was sent. In terms of recent “suspicious” transactions, this left only two recent international deposits: one from my parents overseas and one from my savings, neither of which could be classified as large. I’m not an expert on complex behavioural analysis networks and fraud detection within banking systems, but would expect that study grants and family support are not unexpected for students? Moreover, rather than this being an isolated incident, it would seem that HSBC’s “account review” affected a number of people within our student community, some of whom might choose not to question the decision and may be left without bank accounts. This should raise questions about the effectiveness of their fraud detection system, or possibly a flawed behaviour model for a specific demographic.
Expect more of this kind of thing as computers continue to decide who is normal and who is not.
Shefaly Yogendra • December 18, 2006 6:58 AM
I don’t think there is anything inherently wrong with a computer-model raising ‘risk’ flags. All one has to do is to consider a situation where a flag was not raised (say a fradulent credit card transaction that does not fit my profile of spending), and then imagine the hassle in cleaning it up. That also damages one’s credit rating big-time.
In the UK, the KYC norms are implemented with great zeal to prevent money laundering, and I am sure, although nobody will admit it, recently arrived foreigners with little no credit history in the UK will probably have lower thresholds for raising of such flags.
However I wonder if these models also inform banks of the damage to their reputation. They should by all means see these flags and take note, but questioning the customer with the presumption as if (s)he were a criminal or worse, hastily telling them they are not welcome, is a stupid strategy. Then again the less said about British customer service traditions, the better.