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Combat fraud at inception with early detection and prevention. Empower your business with confidence throughout the entire customer lifecycle while delivering a seamless digital and call center experience.
The following are examples of fraud costs:
Measurement is critical to understanding any fraud program’s performance and your ability to identify trends that allow tuning of the system throughout the year to maximize sales and combat fraud. It’s important to measure and monitor these important fraud prevention metrics:
Fraud can occur in various forms. Both business and individuals are at risk of being victimized by fraudsters. The four primary types of fraud include:
Fraud prevention strategies must reduce the instances and scale of fraud and also enhance the customer experience. Fraud prevention can be as simple as confirming the legitimacy of a document, such as a person’s photo ID, when applying for a credit card online to ensure its veracity and verify the identity of the individual. Digital fraud prevention requires automated systems designed to detect fraud risk, flag potential fraud and let low-risk transactions flow without interruption.
The goal of fraud prevention is to proactively identify and prevent fraudulent activities before they cause financial or reputational damage. This involves implementing a multi-layered approach that combines technology, data analysis, internal controls, and employee awareness to detect and prevent fraudulent activities. Some key concepts and techniques used in fraud prevention include:
Risk Assessment: Assessing and understanding the risk factors associated with different types of fraud helps in identifying vulnerabilities and implementing targeted prevention measures.
Fraud Detection: Using advanced technologies such as data analytics, machine learning, and artificial intelligence to analyze large amounts of data for patterns, anomalies, and red flags that may indicate fraudulent activities.
Internal Controls: Implementing internal controls such as segregation of duties, authorization processes, and access controls to prevent fraud by limiting opportunities for employees or others to commit fraud.
Employee Training and Awareness: Educating employees about fraud risks, prevention techniques, and reporting mechanisms to create a culture of fraud awareness and vigilance throughout the organization.
Fraud Response: Establishing protocols for investigating suspected fraud incidents, documenting evidence, and taking appropriate actions to stop the fraud, recover losses, and prevent recurrence.
Compliance: Ensuring compliance with relevant laws, regulations, and industry standards, and implementing appropriate measures to prevent fraud in line with these requirements.
Continuous Monitoring: Regularly monitoring and reviewing systems, processes, and transactions for potential fraud indicators and continuously improving fraud prevention measures based on evolving fraud threats and changing business environments.
Phishing: An email or message that appears to be from a legitimate source, such as a bank or a social media site, that tricks the recipient into providing sensitive information such as passwords or credit card numbers.
Smishing: the fraudulent practice of sending text messages purporting to be from reputable companies to induce individuals to reveal personal information, such as passwords or credit card numbers.
Vishing: the fraudulent practice of making phone calls or leaving voice messages purporting to be from reputable companies to induce individuals to reveal personal information, such as bank details and credit card numbers.
Malware: Malicious software that is designed to gain unauthorized access to a device or network, steal sensitive information, or cause damage to the system.
Identity Theft: The act of stealing personal information, such as a Social Security number or bank account information, to carry out fraudulent activities.
Online Scams: Fraudulent schemes, such as online auctions or investment scams, that trick victims into paying for goods or services that they will never receive.
Business Email Compromise (BEC): A type of phishing scam that targets businesses by posing as a legitimate supplier or executive and requesting that funds be transferred to a fraudulent account.
Account Takeover: The act of gaining unauthorized access to a victim's online account, such as a social media or bank account, to steal sensitive information or carry out fraudulent activities.
Money mule: Money mules are people who, at someone else's direction, receive and move money obtained from victims of fraud. Some money mules know that they have been recruited to assist criminal activity. Knowingly moving money for illegal activities can lead to serious consequences — including criminal charges.
Promotion abuse: A bad actor abuses a business's promotional campaigns to get discounts or bonuses, defrauding a business by using promo codes and discounts multiple times or setting up multiple accounts under different names to get bonus multiple times. They may also abuse coupons and return policies to obtain goods for free.
Gold farming: The practice of playing a multiplayer online game intensively to acquire in-game virtual currency or other valuable items used in the game, to then be sold to other players for real money.
Credit card fraud: A form of identity theft that involves the unauthorized use of another individual’s credit card for the purpose of purchasing goods, services or cash advance. Includes “friendly fraud” where a person’s family member uses their credit card without prior authorization.
Third-party seller scams: A bad actor using an ecommerce website or 3rd party marketplace to collect payment for merchandise that they never intended to ship.
Shipping fraud: A type of account takeover where a fraudster accesses a consumer’s ecommerce account and changes the shipping address for a legitimate purchase to steal the merchandise that’s been purchased.
SIM swap: Also known as SIM splitting, SIM jacking or SIM hijacking, is a technique used by fraudsters to get control of someone’s phone number. With a person’s phone number, hackers can take advantage of two-factor authentication to gain access to their bank accounts, social media accounts, and more.
Government benefit and service fraud: An individual or business entity that submits false information, in the form of an application, claim or tax return, in order to secure financial gain from a government agency program including: unemployment insurance, medical insurance, social security, student loans, business loans or grants, temporary relief programs and social welfare benefits (food or housing).
Fraud prevention is an ongoing process that requires a proactive and holistic approach, involving a combination of people, processes and technology to effectively detect, prevent and mitigate fraud risks. It is important for organizations to develop a comprehensive fraud prevention strategy tailored to their unique risks and requirements, and regularly review and update it to stay ahead of ever-evolving fraud threats.
Combat fraud at inception with early detection and prevention. Empower your business with confidence throughout the entire customer lifecycle while delivering a seamless digital and call center experience.
There are various ways to detect and prevent fraud and all of them should be considered in a layered approach depending on your organization’s business type and associated risk factors. Most businesses have specific use cases that need to be addressed depending on who they’re doing business with, the nature of their business relationships and how they transact.
Regardless of business, in an environment where nearly every organization does business online, it’s imperative to build trust with customers by demonstrating how you’re protecting their information and transactions online.
To secure the customer journey and combat increasingly sophisticated identity fraud, there are some basic fraud prevention techniques that every organization should consider. It’s important to increase trust at each step of the customer journey and across channels to nurture deeper, more efficient and lucrative customer relationships. To do so, you need to deliver seamless consumer experiences and speed up interactions and transactions for legitimate consumers with a multifaceted view of identity, device and behavior. Some common fraud prevention techniques include:
Fraud detection is a set of processes to identify potential fraud risk by monitoring transaction activities, new account opening processes and account access requests.
Fraud can happen at any point in the customer journey, so it’s important to businesses and consumers that fraud detection is active at each point as well. The more business is served digitally and remotely, organizations, their employees and their customers face increased risks. Fraudulent activities, carried out by people, networks or automated bots, focus attention at key points along the customer journey that demand protection. Broadly speaking, there are three main areas of risk to address with fraud detection:
Account opening: Use of fraudulently obtained identity data, real or synthetic, to register or apply for services and open accounts.
Account login: Accessing an account belonging to someone else for illicit gain.
Account or transaction activity: Any business transaction, including account changes, applications, purchases, returns, claims or transfers, in which fraudulent activity could be taking place once logged into an account, or as a stand-alone activity, such as a stolen credit card.
Fraud prevention and fraud detection are related but have different definitions. Fraud prevention is a set of policies and processes to reduce the risk of fraud before it happens. Fraud detection is the process of recognizing fraud as it’s happening so that it may be stopped.
Typically, fraud prevention strategy is aligned to specific industries or businesses, like a retailer trying to stop shoplifting. The fraud prevention supports strategic revenue and profitability goals and involves a set of business policies across customer interactions and internal processes.
Fraud detection involves the tactical application of technology tools and manual processes to monitor all manner of transactions to determine if they’re being performed by an authorized person for legitimate reasons. For example, is the person trying to submit a loan application the actual individual identified and are they submitting factual information that a lender can use to assess risk.
Apart from matching a person’s face to government issued photo ID in-person, fraud detection requires sophisticated technology and robust global data to be effective. The most effective methods of fraud detection rely on large volumes of data signals:
Smart fraud detection requires a set of tools and data that orchestrates identity, device and behavioral insights to help organizations secure trust across channels and deliver seamless experiences for consumers. Increase trust at each stage of the customer journey and across channels to nurture deeper, more efficient and lucrative customer relationships.
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