Customer Validation Ensuring Your Customer is Who They Claim to Be'

1
Customer Validation Ensuring Your Customer is
Who They Claim to Be.

• Kurt W. Roussell
• Manager Revenue Protection
• We Energies, Milwaukee, WI

2
What is the problem?

• Utilities are closing their local community
  offices
• Loss of face to face interaction with customers
• Loss of viewing personal identification at the
  time of account issuance
• Loss of local intelligence
• Reps typically learn which customers are up to
  something

3
What is the problem?

• Customers have learned it is easy to
• Provide false information on the phone
• Pretend to be someone else to establish service
• Pretend to be the owner of the property
• Put children on service
• Shop around for the less diligent phone agents

4
The End Result

• Increase in fraudulent applications for service
• Name
• Personal Identification characteristics
• Social security number
• Date of birth
• Name switching
• Establishing accounts in names of the other
  residents to avoid bill payment or to have
  service restored

5
The End Result

• Increase in Identity Theft
• What is identity theft?
• Identity theft occurs when someone uses your
  personally identifying information, like your
  name, Social Security number, or credit card
  number, without your permission, to commit fraud
  or other crimes.

6
Scope of the Problem

• Our industry is tied for 3 in volumes of
  complaints

7
Scope of the Problem

• We are second to the Wireless Industry in new
  account fraud!

8
Scope of the Problem

• How does your state rank?

9
Advent of the Positive ID Program

• We Energies instituted its first generation
  Positive ID (PosID) Program in 1998
• Due to the closing of the customer business
  offices, the decision was made to establish
  partnerships with local community-based
  organizations to accept written applications to
  be submitted to PosID.
• This provides for local locations convenient to
  customers throughout the service territory
• Provides financial support for the organization
• 8 per application
• They make copy of customer identification, lease
  agreement, rent receipt, etc., and fax copy to We
  Energies
• Original applications mailed to us for filing
  later.

10
Advent of the Positive ID Program

• Upon receipt of faxed application
• Customer identification information is confirmed
  via Accurint
• Name and social security number
• History of previous addresses
• Change in tenancy confirmed with property owner
• Outcomes
• Approved new account authorized
• Conditionally approved customer has existing
  balance at prior location, and upon receipt of
  down payment and payment agreement new account
  authorized
• Denied variety of reasons service stays off
• Previous tenant still resides here
• Owner confirms previous tenant still there
• False or mismatched social security numbers

11
Advent of the Positive ID Program

• This existed until 2006.
• Other than applicants in credit locked locations,
  little identification verification was performed
  on regular account transactions (starts, stops,
  moves, pay agreements).
• There was corporate desire to verify more
  customers to
• Protect our customers from identity theft
• Protect our company from corporate liability
• Reduce future customer disputes and fraudulent
  accounts

12
Improvements to Customer Verification Process

• Verification is performed on a wider range of
  customers
• Any new customer (never had service with We
  Energies)
• Any additional Y-designation customer (except for
  spouses)
• Under Wisconsin Law, any person can present a
  current utility bill as proof of residency for
  the issuance of a State ID or drivers license
• Noted exponential increase in the addition of an
  additional customer on the bill so an ID card can
  be issued

13
New Verification System

• After the evaluation of several identification
  tools, we chose Instant ID from Lexis/Nexis as
• it provided future enhancements that we wished to
  migrate to in stages
• Weve had established relationship with Accurint
  and was satisfied with the product.

14
Data Entry View
15
Customer Fails

• An applicant score of 30 or less is cause for
  concern and further review/investigation.
• Low scoring applicants should be referred to a
  Positive ID location for an in-person
  application.
• Scores of 0 to 20 are ineligible for Instant ID
  QA

16
Results

• As of 9/30/2007
• 43,122 transactions
• Cost 29K or .65/customer
• Feedback
• Customers find it comforting we take the extra
  step to protect their identities
• Our representatives find it easy to use and a
  good tool
• It also heightened the awareness of our phone
  representatives, they enjoy using the application
  to verify their suspicions that something strange
  is going on.

17
Implementation of Instant ID QA

• Desire to reduce expenses of the Positive ID
  Program
• Reduce number of written applications
• Make it more convenient for customers
• Reduce the 8/transaction agency cost
• Reduce FTE allocation during the peak collection
  season
• Use the verification on more people at a lower
  cost
• Maintain the same level of fraud enforcement

18
Implementation of Instant ID QA

• New process developed
• Locations where Positive ID indicators exist
  (recent stop service w/large balance,
  disconnected for non-payment, meter locked due to
  owner agreement) the customer is given the option
  of reporting to a PosID site to complete a
  written application.
• Customers who pass, PosID staff is notified, and
  the conduct change in tenant investigation
• Customers who fail are referred to an agency to
  complete a written application and provide proof
  of identification, lease agreement, social
  security card, etc.

19
How QA works

• QA uses a combination of information from
  private sources, public records and credit
  bureaus
• It generates questions that the customer should
  know
• Will generate red herring questions
• Certain questions will time out if not answered
  quickly enough
• E.g. What color is your car?
• Configurable parameters
• Questions asked
• Pass/Fail ratio
• Number of allowable attempts over how long a time
  period.

20
QA Process
21
Instant ID QA

• It knows I havent lived there in years, and the
  social security number did not match up.

22
Instant ID QA

• I failed off to complete a written application
  I go!

23
Behind the scenes

• You can check to find out why a person failed.
  This is useful if they escalate a complaint to
  the Public Service Commission.

24
Results
25
2005 v. 2006
26
Positive IDwritten applications 2007
27
September 2006 v. 2007
28
QA Results!

• 11,256 transactions 5,003 failed
• Failure rate mirrors in-house Pos ID
  verifications. Customers who fail the QA are
  referred to complete an application. They fail
  there too!
• If all the transactions had been performed via
  agencies, the cost would have been approximately
  90K. We have saved 73K in via QA
• 9,800 written applications have been processed,
  down from 13,324 last year
• We are checking more people in more scenarios
  than ever before SAVING

29
QA Results!

• YTD expenses (9/30/07)
• QA 11,261
• Written applications 78,500
• Last year 108,200
• Net savings YTD 18,439 1FTE
• Avoided expense 73K if we sent all QA
  applicants to complete written application

30
Questions?