In an average year, businesses lose 5% of their revenue to fraud. However, the last few years have been anything but average. Since 2020, there has been a dramatic rise in the amount of fraud, and experts expect it to continue to grow.
According to the Association of Certified Fraud Examiners (ACFE), more than half of organizations have seen an increase in fraud attempts since the beginning of the pandemic. Nearly three-quarters of businesses expect the level of fraud that impacts their business to grow even further.
Companies today are under a greater threat of fraud. Cybercriminals are organized and sophisticated in their methods and more aggressive in their tactics. As a business, you need to enhance your fraud risk management approach to fight back.
An effective fraud management program can help. According to a study done by LexisNexis, multi-layered fraud prevention services can reduce successful fraud attempts by 71% and reduce the cost of dealing with fraud by 12%.
So, how do you choose the best business fraud protection services? Here are some of the key factors to consider.
Choose the Best Fraud Prevention Services
Just about every consumer has had their data compromised over the past few years. Credit cards, banking information, and user passwords are traded and sold on the dark web. Criminals are also creating synthetic identities by attaching real data to fake identities to commit fraud.
ID Verification
You need fraud prevention services that go beyond traditional ID solutions. Look for a solution that offers richer, context-based data analysis leveraging digital consumer profiles. The best fraud risk management solutions will check identities against digital data, such as location, device configuration, and behavior. Look for fraud protection services that check multiple sources, such as:
- Purchase history
- Network IP addresses
- Credit bureau data
- Bank data
- Geo-location correlation
- Prior device usage
- Email age
- Behavior patterns
Authentication
The key to fraud prevention begins with authentication. Two-factor authentication (2FA) or multi-factor authentication (MFA) should only be a starting point to verify identities. Your fraud protections services should also examine first-party data and third-party data to create a fraud score and digital confidence score.
Organizations should also be able to set custom thresholds for acceptable fraud scores before approving transactions.
Device Analysis
The best fraud protection services will also examine device use to look for potential signs of fraud, such as:
- Do the user and device share a history?
- Does the device configuration match user preferences?
- Is the device in a geo-location associated with the user?
- Is the device being used for multiple identities?
- Is the device a prepaid phone?
- Does the device configuration pose malware concerns?
Command Credit’s FraudNet solution, for example, has more than 800 rule sets probe for fraud, including checking whether devices have been associated with previous crimes, suspected fraud, or risky activities.
Response Time
While you want to reduce fraud, you do not want to put up barriers for legitimate customers to complete transactions. So, speed is important. Despite the sophistication of fraud protection services, you want the customer experience to be seamless.
Look for fraud prevention services that have sub-one-second performance.
False Positives
The best solutions will also have a defined strategy for reducing false positives. When a legitimate customer’s transaction is declined, it is frustrating for the customer and costs you sales.
Compliance
Any fraud prevention services you consider need to be compliant with global and industry-specific regulations, such as:
- PCI DSS
- SOC2 Type 2
- GDPR
- KYC
Machine Learning
Algorithms will drive the authentication process, but you also want fraud protection services that employ machine learning. As more data is collected, systems learn to better recognize patterns and trends that are tied to suspicious activity.
For example, analyzing chargebacks may surface additional warning signs that deserve further investigation.
Business Identity
You should also consider fraud protection services that examine your business customers as well.
When there is business identity fraud, the real business profile might not indicate a problem and a credit check may indicate good credit. However, you need to make sure that it is the real business and not someone impersonating them.
You can also use fraud protection services to establish business identity, identify risk factors, and make better credit decisions.
This provides an additional layer of security for business customers, suppliers, and distributors.
The Best Fraud Risk Management Solution for Your Business
The right fraud risk management solution will reduce your losses from fraud and chargebacks while protecting the customer experience.
Command Credit offers business credit reports, risk portfolio management, and integrated credit solutions as well as fraud prevention services. Contact Command Credit today to manage fraud risk.