How to find the right fraud prevention solution for your business
Online fraud is on the rise. Payment fraud is expected to cost online businesses $48B in 2023, up 16% from $41B in 2022. In order to reduce exposure to fraud and enable seamless customer experiences, companies must find the right online fraud prevention solution for their needs.
Read on for a breakdown of the common types of online fraud prevention solutions and how to evaluate their capabilities.
What is online fraud prevention?
Online fraud prevention refers to the tools, techniques, and controls used to prevent, detect, and mitigate fraudulent activities carried out over the internet or other digital channels. Online fraud prevention is intended to protect businesses and their consumers from financial losses, reputational damage, and other negative consequences that can occur from online fraud, such as identity theft.
Online fraud prevention solutions tend to be delivered via one of these approaches:
- Point solutions: Point solutions tend to be limited in scope as they are designed to address a narrow use case, such as device fingerprinting or bot detection.
- Decision-as-a-service: Decision-as-a-service solutions shift the focus of control from your business to your vendor to prevent and detect online fraud, but lack many fraud management capabilities, such as decision logic and policy changes.
- Digital Trust & Safety platforms: Digital Trust & Safety platforms like Sift include comprehensive fraud-fighting capabilities, such as a decision engine powered by machine learning and global signal intelligence, case management, orchestration, reporting, simulation, and consortium risk assessment.
- Other platforms: Other platform solutions tend to share similar limitations with point solutions—their narrow scope does not provide the same depth and breadth of features.
There is no such thing as a one-size-fits-all approach to online fraud prevention, which is one reason that the lack of transparency and control in decision-as-a-service solutions can hinder online fraud prevention efforts, but generally speaking there are several important features.
What are the features of online fraud prevention?
Comprehensive online fraud prevention solutions, such as a Digital Trust & Safety platform, should include a decision engine to perform risk assessments, case management systems to group, investigate, and take action on transactions, orchestration with third-party data sources, reporting capabilities, the ability to simulate changes to policies, and consortium risk capabilities (e.g., the benefits of using a shared global network).
Furthermore, there are some key capabilities that businesses should consider for their online fraud prevention solutions:
- Control: The ability to apply decisions to transactions and modify risk thresholds, based on unique business needs, such as the ability to modify policy enforcement (e.g., approve, challenge, reject) based on risk tolerance or the ability to analyze policy changes with simulation.
- Transparency: Provides the visibility and context needed to easily understand fraud patterns to make informed decisions, such as the ability to identify red flags and positive signals alike.
- Automation: Adapt to evolving fraud with automated decision-making to proactively block fraud, leveraging real-time insights from a global fraud intelligence network and/or custom-tailored machine learning models.
- Investigation: Surface critical information and make informed decisions more quickly, such as advanced visual analytics and bulk actioning of transactions.
- Scalability: More scalable solutions evaluate risk throughout the entire customer journey (e.g., account signup, account updates, point of purchase), enable decision-making at each step along the customer journey and reduce false declines with customized machine learning models based on your business.
To determine the best solution for your business, you’ll want to evaluate how the technology works across each of these key capabilities.
Why are Digital Trust & Safety platforms the best choice for online fraud prevention?
Choosing from among the majority of online fraud prevention solutions represents a “Goldilocks” dilemma; point solutions and single-purpose platforms lack full fraud prevention features and decision-as-a-service lacks transparency and control—but Digital Trust & Safety platforms get it “just right.”
Digital Trust & Safety platforms include a variety of unique features that are unavailable or limited in other online fraud prevention solutions, including:
- Real-time risk assessment and decision making at every interaction.
- Unlimited custom data and user-designed fields, including unique events and signals.
- Advanced signal extraction that fuels models and custom rule builders.
- Built-in native authentication capabilities for dynamic policy enforcement.
- Advanced management capabilities, including visual analytics for user and order-level insights.
- Real-time order and chargeback reports (e.g., order volume, acceptance rates, block rates, chargeback rates).
- Easy report exportation for further data analysis.
These platforms tend to provide better detection than point solutions or single-purpose platforms because they offer better real-time machine learning and heuristics for fraudulent payments, account takeover, and spam content. On the other end of the spectrum, Digital Trust & Safety platforms tend to provide more transparency and control than decision-as-a-service because they offer customizable interfaces and controls.
Learn more about how to evaluate online fraud prevention solutions in Sift’s Evaluation guide for online fraud solutions.
The post How to find the right fraud prevention solution for your business appeared first on Sift Blog.
*** This is a Security Bloggers Network syndicated blog from Sift Blog authored by Sift Product Team. Read the original post at: https://blog.sift.com/how-to-find-the-right-fraud-prevention-solution-for-your-business/?utm_source=rss&utm_medium=rss&utm_campaign=how-to-find-the-right-fraud-prevention-solution-for-your-business
