As a solution provider for Identity and Fraud management, we deal with fraud cases and methods on a daily basis, and always discover that many online retailers do not report fraud. The reason is, the probability of the perpetrator being caught is usually too low and the expenses associated with reporting it too high. Retailers rather consider a certain level of fraud losses to be part of “normal” business risk, which means it is a continuous balance between opportunities and risks and the related fraud prevention measures.
On the other hand, scammers have become more professional through forums and online marketplaces in the darknet. From drugs and weapons to stolen accounts, anything can be obtained there. The service is known to be extensive, online scammers can find an offer for every need and an answer to every question. According to our observations, criminals themselves are now using artificial intelligence and are attempting to protect themselves from being exposed.
This results in a cat-and-mouse game between investigators and scammers, where the scammers are becoming more and more professional and online retailers are equipping themselves with new and more effective fraud prevention methods.
In order to detect fraud early on, and therefore to prevent it, we recommend an appropriate combination of various technologies and processes, which can range from user authentication running in the background to optimisation and automation of manual transaction monitoring, depending on the context.
These measures currently include:
- Risk assessment, identification of fraud patterns and anomalies with adaptive decision models through machine learning and big data analytics.
- The automated transaction monitoring and rules-based decision-making through intelligent linking and analysis of device, user and transaction data.
- Real time device identification to differentiate between suspicious and trusted devices with the help of browser fingerprints.
- Biometric authentication with the help of machine learning algorithms. Invisible two-factor authentication.
- Collective intelligence network based on common data from various pool participants.
You can find more information on fraud prevention solutions and how you can protect your company here.
To read the above-mentioned article in the Handelsblatt “The dark side of e-commerce – fraud causes billions in losses” click here.