5 key benefits of fraud prevention and digital fraud detection
When businesses conduct sales online, they become susceptible to a variety of e-commerce fraud risks. These fraud risks include digital payments fraud, account takeover attacks, promo code abuse, e-gift card fraud, friendly fraud, and more.
One fraud attack alone can mean sudden, heavy losses for a business, not just in immediate monetary terms. Fraud attacks can also cause irreparable brand damage, erode customer confidence, and even have legal ramifications.
As the adage goes, an ounce of prevention is worth a pound of cure. The best fraud strategy is a proactive one. And the best way to prevent fraud is to use a digital fraud detection solution that delivers these five key benefits.
1. It detects new and evolving fraud attacks
Fraudsters are constantly inventing new ways to exploit vulnerabilities or increase the complexity of their attacks to bypass security systems. That means fraud threats can present themselves in new and more sophisticated ways.
If you have preventative fraud detection in place, especially one with machine learning fraud detection, you have a higher chance of catching new and unexpected fraud attacks. A solution that uses supervised and unsupervised machine learning leverages historical data and predictive analytics to identify abnormal behavior.
Machine learning models can accurately flag abnormal behavior and stop never-before-seen fraud threats by looking at the past to determine the future and comparing behavior to its current environment.
2. It helps you accept more good orders and increase revenue
AI fraud detection simulates an experienced fraud analyst by weighing the risk of fraud against the value of a customer but on a faster and more scalable basis, increasing order acceptance rates and revenue.
AI can weigh the risk of fraud against the value of a customer almost instantly. It compares data from an interaction against billions of identity trust signals to produce a transaction safety score. The solution then automatically declines or approves interactions according to unique business policies.
An AI-driven solution can accurately assess a customer’s trustworthiness on a faster and significantly larger scale than human judgment alone. That means thwarting bad orders, accepting more orders from good customers, and reducing false positives to capture more revenue that would have otherwise been declined or fraudulent.
3. It lowers fraud operational costs by reducing manual review rates
Fraud personnel who conduct manual reviews as their primary job function generally review 1,000 to 2,000 orders every month, according to fraud review best practices. With the average cost of a fraud review between $2 and $5, manual reviews can be more costly than businesses realize.
With automated digital fraud detection, businesses don’t have to rely on manual reviews to determine if an order is good or bad. A fraud prevention solution can automatically and correctly approve or decline orders according to customizable policies, drastically alleviating the burden of manual reviews and associated operational costs.
And when businesses don’t have to conduct hundreds or thousands of manual reviews, they can redirect resources to other priorities.
4. It significantly reduces chargebacks pre- and post-authorization
Combating chargebacks can be extremely challenging for businesses. Since customers can initiate disputes up to 120 days after a transaction, finding their root cause may not be apparent until much later. Delayed processing can cause unexpected chargeback costs that add up quickly and even put businesses at risk for placement in fraud monitoring programs.
A payments fraud prevention solution protects digital payments from fraud before a business authorizes and processes the transaction. So when a fraudster attempts a purchase with a stolen credit card, if the business has a preventative solution, it can decline the transaction altogether.
On the other hand, a chargeback mitigation solution allows businesses to act on dispute inquiries and chargeback alerts in real time post-authorization. In this instance, when a customer initiates a dispute from accidental and intentional friendly fraud, a business can intercept it and communicate transaction details to prevent a chargeback.
Together, these solutions can drastically reduce chargebacks pre- and post-sale and greatly reduce inventory and fraud losses.
5. It stops high-velocity attacks from bots and malicious log-in attempts
Fraudsters perform highly sophisticated mass bot attacks to access sensitive information and stored value. Bot attacks are particularly destructive because of their speed and breadth. A fraudster can access hundreds or thousands of accounts or credit card details in a few minutes.
Tools with bot prevention capabilities can detect and stem these high-velocity attacks. For instance, if a fraudster is attempting to test credit card details to see which ones are valid, a fraud prevention solution can recognize the speed of the activity as abnormal and stop it.
Likewise, an account takeover solution can stop high-volume log-in attempts. Fraudsters go after customer accounts for stored value items like credit card details, personal information, and loyalty points. A solution can identify the high-volume log-in attempts and block them, protecting customer accounts.
Getting the right solution is like adding a digital fraud detection expert to your team
Kount’s AI-backed Identify solutions emulate an experienced fraud analyst while staying ahead of emerging fraud trends, lowering manual review rates, reducing chargebacks, increasing order acceptance, and protecting customer accounts.
Identify solutions enable businesses to gain a 360-degree view of their customers by fusing digital and physical identity attributes. These insights allow businesses to stop interactions with bad actors and ensure secure, delightful experiences for good customers.
Additionally, once businesses identify a good customer, they can use these insights to enhance the buying experience across the customer journey to increase revenue opportunities.