Everywhere you look, whether you know it or not, fraud detection and prevention tools are at work. Knowing which tool is the right choice can prove to be one of the most crucial decisions you make for your business.
Fraud Detection – What Is It?
In the simplest of terms, fraud detection is a series of techniques and processes created to monitor, identify, and subsequently prevent fraud. Fraud, primarily in the form of scams, runs rampant online. For this reason, it is crucial that, for their own safety, website owners put measures in place to ensure that any possible fraud is not only detected but stopped in its tracks before anyone can do any significant harm
Fraud detection is the first crucial step when determining where any risk may lie. Once this step is achieved, any fraud can then be managed, either manually or automatically, through the use of various strategies in risk management. Many businesses have taken to employing specialists in the field of fraud detection, which usually falls under titles such as risk manager, fraud analyst, the officer of trust and safety, and others.
Fraud Detection – Why Is It Important?
If your business has an online presence, there is no way around having some form of fraud detection monitoring. Attacks can occur in various forms and, as a result, can affect each business differently. According to a crime and fraud survey conducted by PwC in 2021:
– In the past 24 months, an estimated 46% of online businesses had experienced some form of fraud.
– On average, businesses report six fraud attacks.
– In the US alone, businesses lost $42B due to fraud
– Of the businesses that fell to fraud attacks, only 56% reportedly investigated their worst case
To add even more insult to injury, fraud attacks show no sign of slowing down but are gathering in scale, intensity, and increased sophistication. For this reason, it is in any business owner’s best interest to take measures involving their fraud detection techniques to determine which tool is best for preventing fraud for their business.
Fraud Prevention and Detection – The Features
When looking at taking the best steps toward preventing and detecting fraud in your business, you will need to combine several specific features:
– Data enrichment: with this feature, you will collect data externally that will allow you to create a picture of a user. An example would be using a reverse email lookup feature, which will enable you to determine how risky a possible user may be based on the single data point of their email address.
– Social media lookup: the most potent and efficient way of finding out a user’s presence on a social media platform. Searching for a social media presence is efficient for compliance reasons or simply verifying an individual’s ID. The process you use must be capable of searching across as many social media networks in as many regions as possible.
– Risk scoring: the process of fraud prevention is achieved through the weighing of potential risks. For this reason, controlling the risk calculation is crucial in how it can be adapted to your particular business. With this control, you will be able to more efficiently automate your users’ review, approval, or rejection of specific actions.
Fraud – The Common Types
Fraud can appear in many forms and can morph and adapt to almost any type of business model. With that said, there are a few types of attacks that are recurring and essential to be on the lookout for:
– Purchases made on a stolen credit card
– Hijacking of an individuals account
– Creation of a fake account through stolen identities
– Abuse of the terms set down by merchants
– Friendly fraud, such as in contesting a payment
– Affiliate or marketing partnership fraud
– Return fraud brought on by merchants such as Amazon
With the ever-increasing fraud cases, businesses with an online presence need to adapt and change to stay ahead of the curve. For a business to survive, it must have detection and prevention features in place. Business owners need make a concerted effort to stay up to date and informed if they will keep ahead of the ongoing surge of fraud.
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