Fraud is a growing problem for businesses operating online; but better than catching fraudsters is preventing them from plying their trade in the first place. Here are five strategies to beat them.
By Martina King, CEO of Featurespace
Know your customer
By using predictive analytics fraud can be vastly reduced because you correctly understand past transactions and can accurately predict future transactions.
Predictive analytics has made a step toward intelligently profiling behaviour in order to provide better customer service, but it still forces organisations to make generalisations and assumptions about their customer base.
Read On:
Eight steps to protecting your website against fraud
Phishing: advice for retailers
Building a trustworthy website
Adaptive behavioural analytics goes one step further, enabling e-businesses to cleverly model individual customers and make fraud prevention decisions based on actual customer behaviour, not assumptions.
Even better, Adaptive behavioural analytics allows e-businesses to take external factors into account such as weather, trends and holidays.
By intelligently profiling behaviour you can remove hurdles for customers, who may otherwise be blocked buying wine online for example, or have their transactions limited during busy holiday shopping periods.
This not only provides smarter fraud prevention, but can increase loyalty and prevent churn by allowing good customers the freedom to purchase without the hassle of arbitrary rules.
Stop looking over your shoulder
Fraudsters are getting increasingly sophisticated to suit changing technology, it’s therefore imperative to be at the cutting edge of fraud prevention to be able to defend your business and your customers.
The worst type of fraud is the one you’ve never seen before, the one you aren’t even aware you should be looking for.
You simply can’t afford to underestimate fraudsters. After all, you’ll never be able to out-think them, as it’s their job to come up with ever more intelligent fraud tactics.
It’s no longer acceptable to assume a fraudster is one person in his mother’s basement working alone—we now know that there are substantial organisations trying to defraud every single industry.
These are people who learn from their mistakes and never make the same mistake twice.
Adaptive behavioural analytics allows you to know what your customers look like down to the finest detail, enabling you to accurately spot illegitimate transactions or breaches before they occur.
Stay ahead of the curve
Real-time, self-learning analytics ensures businesses aren’t just on top of known fraud but that they’re able to stay ahead of unknown unknowns and detect things that competitors can’t.
Understand multichannel
Online purchasing is increasingly going mobile; and businesses need to react to this. There are now more data points relating to a transaction like location data and device biometrics.
As the customer experience becomes more multichannel, invariably so too will the fraudster’s strategy. The challenge is for businesses to use a fraud solution which can leverage the widening variety of data points and provide equally sophisticated analytics to match.
Re-think the cost of doing business
Fraud shouldn’t be treated as a natural by-product of doing business online. Nor should it be considered as being hugely expensive; meaning only large organisations can afford it.
Fraud prevention needs to be built in at a grass roots level since behavioural analytics allows for accurate, effective and predictive analysis. Also, the fact that such analytics is automated makes it affordable for SMEs, reducing the barriers to entry and levelling the playing field with large companies.
It is also crucial to understand the balance between preventing fraud and accepting good customers. Adding increased security steps, like 3D security and captchas, although helping reduce fraud, are actually reducing profits and are damaging to customer conversion rates.
The ability to understand the balance between ease of transaction and security is as important as the detection and prevention of fraud.
For more information visit www.featurespace.co.uk
Speak Your Mind