Online Fraud Prevention Requires a New Solution

Reactive online fraud prevention strategies no longer cut it. Too often, financial institutions learn about fraud when customers complain about losses. Attempting to keep up by defining new detection rules after the fact is no longer realistic, as you can never anticipate and respond to every new fraud pattern.  Staying in reactive mode means your institution remains at the mercy of fraudsters and their ever more sophisticated methods.  Adequate monitoring of trends, policy controls, and compliance requirements continues to elude many institutions.

Financial Institutions Remain Exposed

The conventional technologies that hope to solve the online fraud problem, while often a useful and even necessary security layer, fail to solve the problem at its core.  These solutions often borrow technology from other market domains (e.g. credit card fraud, web analytics) then attempt to extend functionality for online fraud detection, with mixed results.  Often they negatively impact the online customer experience while failing to prevent fraud.  

Typical alternatives include:

1. Multi-factor and risk-based authentication solutions, although a necessary frontline defense for any financial website, are not aimed at fraud detection as a core competency.   Online account credentials remain vulnerable, as fraudsters have proven the ability to completely circumvent this technology. Authorization failure and the need for challenge questions are non-actionable, inaccurate indicators of fraud, and challenge rates are too high to be acted upon by limited fraud investigation resources.  Weak fraud detection capabilities (e.g., device identification, cookies) do not deliver the performance required and lack the rich behavior models and account history necessary to investigate suspicious activity.   

2. Fraud rule- and pattern-based transaction monitoring solutions are always one step behind.  They merely react to known threats instead of recognizing new ones as they happen.  They require complicated rules development, known fraud “truth sets” for algorithm training, and ongoing “care and feeding” maintenance to try to remain current.  As a result, these solutions are unable to spot new fraud types and patterns – such as seemingly benign account reconnaissance activity.  Once a breach occurs, most return minimal detail on any given fraud instance to aid investigation.  They return little context, limited characterization of individual customer behavior, no visual analytics, less granular risk scoring, and minimal forensics

The online fraud problem is so unique it deserves a fresh approach. Guardian Analytics FraudMAP® provides a high impact, quick to deploy technology that overcomes the limitations of these reactive approaches.  Learn about the advantages of FraudMap.

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