With consumer behaviour changing rapidly over the last 10 years, fraud has only become even more of a concern for online businesses globally, as seen by online fraud increasing continuously.
Ecommerce fraud in particular has seen an increase in fraudulent attacks but no matter what industry, to ensure that your business is properly protected it's vital to address the problems you are facing.
The fraud prevention market is filled with innovative products however there is a level of similarity on the surface, so truly understanding your requirements will help sieve through the many solutions.
Why Is It Important to Choose the Right Fraud Protection Solution(s)?
As an example of why it's so important to plug the gaps, let's stick with the ecommerce industry for a moment.
Offering the option of order returns will no doubt boost your chances at landing a long term, loyal and valuable customer. Yet this brings the risk of return fraud, both friendly and deliberate.
You could enforce heavy KYC checks such as requesting ID and contact info when accepting returns although this will add more friction to your customers experience, if there's a genuine issue with the product why would they need to submit all this information?
The key point is to have processes in place to understand your customer before shipping the item in the first place, something that's only possible with certain risk management solutions.
In this situation, making use of a pre-KYC tool such as reverse email lookup will reveal instantly if the email address is valid, whether it's been opened with a temporary domain service and help create a holistic profile of said customer.
What Should I Consider When Choosing a Product?
As mentioned above, many products offer similar core features with slightly differing points of emphasis.
Some products focus on the issue of chargebacks, some focus more on mass automation of transactions - this is why it is essential to understand your business needs. Attributes you should look out for on include:
Automation
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Depending on your views on the financial impact of areas such as chargebacks, you might want a tool that simply runs in the background with set rules and no need for human input.
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Risk rules can be customized manually and have some input from your fraud detection software. Through a whitebox machine learning algorithm, you can give your risk managers more control and influence the system to make it best suited for your business.
Multi-Layered Defences
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A secure fraud management system will offer certain types of solutions to ensure protection such as device fingerprinting as mentioned by SEON, machine learning capabilities and user authentication methods.
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There is a clear increase in the varieties of fraudulent activities so it becomes almost impossible to ensure that a single system can solve every issue.
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Making use of APIs and combining with other companies' products can help patch any holes in your 'main' system.
User Behaviour Analytics
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Understanding your customer is the best way to mitigate risk, as the more you can verify the person and their attributes, the more likely you can trust the transaction.
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Make use of features such as phone/email lookup tools, IP analysis and device fingerprinting all help validate whether the person is a genuine shopper or fraudster.
Alerts and Notifications
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A better fraud prevention software will provide real-time alerts and notifications to help speed up the time it takes to bring potential fraud cases to your attention.
Deployment, Integration and Maintenance
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Whilst this might depend on your urgency, it's important to consider how costly and time-consuming deploying such software can be.
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Utilising API integrations can massively cut on both costs and time but also it's worth considering how much maintenance is required from your side.
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Having your in-house fraud team working with a knowledgeable and reliable customer success team from the software side is the most effective way to reduce costs.
Compliance
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Depending on the industry you're in, any software you work with should meet the requirements of the regulator in your industry.
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Specifically the PCI DSS standard and GDRP are two regulations you should keep note of when deciding on a solution.
As companies continue to release new fraud-prevention tools, the most important factor for your decision should come from truly understanding the needs of your business / industry.
Layering your defences with different products from different companies might sound complicated but with the right support, it's easier than ever to cherry pick the most suited solutions.