Fraud prevention is an ongoing process to combat fraud attempts through rigorous verification of users – before they access the business network as well as when they are within the network. Technology-driven fraud detection software can play a big role in fraud detection, across the globe
As the digital economy continues to grow, consumers are increasingly using online channels for a number of life activities. This prolific growth in platforms – and now the metaverse – along with the users accessing them, through digital accounts, have opened up numerous attack opportunities for bad actors. Cyber criminals steal consumers’ credentials and use them to blend in with good users to execute identity-related scams.
The metaverse, which is touted to be the preferred destination for purchase of NFTs and in-game assets such as skins and avatars, is also an attractive target for seasoned fraudsters who are testing stolen financial data before making expensive purchases.
It is estimated that in 2023, US$ 8 trillion will be lost to cybercrime, which is approximately the sum of the top third and fourth GDPs of the world! This is because, today, more than ever before, fraudsters have easy access to data, commoditized tools and the expertise to launch attacks that can disrupt business operations and cause financial and reputational losses to businesses and consumers.
Cyber criminals rely on a thriving cybercrime ecosystem to launch targeted attacks through toolkits, expertise, support and even the ability to outsource the attacks through crime-as-a-service. They are also constantly evolving their attack tactics and creating workarounds to bypass the defenses that businesses deploy. However, businesses are obliged to ensure security of the users, their data and digital identities and, therefore, must take adequate measures for fraud prevention.
Why fraud detection is important
Businesses, across industries, are facing a surge in fraud and find it difficult to keep up with the dynamic and evolving threat landscape. There is no industry that has been left unscathed in 2022. At 62%, nearly two-third of large banks in the US reported an increase in financial crime, eCommerce losses due to payment fraud reached US$41 billion in2022 which is expected to rise further to US$ 48 billion by 2023. Social media platforms registered a 1000% increase in account takeover attacks, while in the online gaming segment, 86% of responding gamers said they had encountered online harassment.
Globally, businesses are losing trillions of dollars to fraudulent activities every year. These are whopping financial losses; and businesses cannot keep absorbing them as a cost of doing business. Businesses suffer operationally as a deluge of calls to customer support from irate consumers can increase operational costs. They also risk damage to their brand equity, which takes a rather long time to build. With easy access to social media platforms, customers are quick to voice their annoyance, which can damage the reputation of the organization in no time. Negative publicity can adversely impact business growth and even cause customer churn, and revenue loss.
Further, there is a real and severe risk of organizations not complying with the regulations that mandate security for consumer data, which can attract penal action and payment of huge fines.
Fraud ultimately affects the end-users, and in worst cases, their entire lives. Consumers whose digital identities are stolen or compromised may end up paying bills or loans for purchases that they never made or credit which they never sought. They even risk being barred from transacting online or seeking loans until their identities are restored. Consumers may need to spend disproportionate amounts of time and money, with no guarantee that their digital identities will get restored. In addition to causing unnecessary hassle, this can be a traumatic experience for consumers, which takes a toll on mental peace.
To prevent businesses and consumers from such life-altering experiences, it is critical that organizations deploy appropriate fraud detection software that enable them to identify and stop bad actors early in their tracks. There is a growing awareness among businesses, across the globe, for the need to check fraud. As a result, fraud prevention has become a top boardroom agenda, with teams working dedicatedly to protect business and customer interests.
Current fraud prevention methods are inadequate
Anti-fraud teams are trying their best to prevent fraud. However, their efforts are impeded by traditional methods and legacy solutions, which means the level of protection they have is inadequate to fight the evolving threats.
Most businesses still rely on manual reviews to screen every incoming user. These manual reviews increase operational costs as they consume a lot of time and effort, causing inadvertent delays in user approval. Today, consumers want their requests to be processed instantly and may not be willing to wait for the result of manual assessment. This can mean customer churn and loss of revenue for the business. Further, being error-prone and open to human biases, manual reviews increase false negatives and false positives.
Legacy fraud detection software are no good either as they cannot match the technical prowess of the fraudsters. A multitude of stand-alone security products only add to an organization’s tech stack without providing any actionable insights.
There are several data-powered solutions on the market that claim to prevent fraud, but cannot clearly distinguish between a genuine user and a fraud identity. This is because over the years, not only have fraudsters manipulated identities at scale but also created synthetic identities that make it difficult to clearly categorize users as good or bad. They also have access to device and location spoofing techniques which makes fraud prevention an onerous task for anti-fraud teams.
To be able to prevent fraud confidently, businesses need user-friendly yet robust identity verification mechanisms that can unravel the truth behind a digital account to reduce abandonment rates and increase business growth.
For instance, ecommerce fraud prevention requires platforms to identify bad actors and prevent account takeover attempts. This is essential to protect both the buyers and sellers from identity fraud and merchants from chargebacks. Therefore, eCommerce platforms need automated solutions that can streamline their authentication processes for accurate identification of bad actors while ensuring safety of good users.
Caf, the trusted identity experts
Caf is powering fraud detection and fraud prevention efforts of leading global businesses. Our ‘Know Your Everything’ identity proofing platform automatically identifies and approves true users while bad actors are rejected. Its inbuilt flexibility allows businesses to orchestrate user-specific workflows that provide in-depth assessment of every user, enabling them to maximize conversions and offer personalized onboarding experience to their customers.
Caf’s unmatched global coverage of reliable and relevant databases ensures the most robust identity verification on the market. Not just at the entry gates, Caf’s solutions can spot anomalous activities of existing users within the platform. Such risky users are further investigated and any fraud attempt is foiled before it can begin to strike roots.
This is made possible through continuous monitoring and the use of cutting-edge technologies. Our proprietary Proof of Life technology, which is iBeta certified, combined with artificial intelligence, machine learning, facial biometrics, device fingerprint, OCR, computer vision technologies, plays a key role in reducing manual reviews, identifying malicious users, improving acceptance rates, and enhancing end-user experience.
Our best-in-class suite of identity verification solutions assure businesses of faster, safer, more accurate and cost-efficient identity verification and regulatory compliance.
To learn how Caf is empowering the fraud detection efforts of businesses globally, talk to a Caf expert or book a demo now.