Want to hear a scary stat? Between 2018 and 2020, the average ransomware request grew by 3900%, rising from $5,000 to $200,000 [1]. Forget Peloton stocks, Bitcoin or GameStop shares, there’s no asset that’s grown by anything approaching that extent over the same period. Unfortunately, as online fraud becomes more profitable, fraudsters become richer, with some of those ill-gotten gains channeled back into the fraud attacks themselves, making them more sophisticated and difficult to stop.
As such, it’s abundantly clear that the threat of online fraud has never been as great as it is right now. Of course, cybersecurity has been an area of interest for business leaders for many years. However, the dramatic rise in volume of online fraud attacks we’ve seen in recent times, as well as the improved efficacy of these threats means the issue must now be a priority. With that in mind, we thought we’d compile the five top things that business leaders need to do to protect themselves from falling victim to online fraud.
Before we begin, let me state the obvious; different industries are affected by different forms of fraud. Every vertical has different risk profiles, and it’s important for business leaders to understand specific areas of concern that apply to them to ensure they’re effectively protected. However, there are some general principles that should be adhered to across sectors. So, the advice I’m going to provide will be deliberately quite broad, but hopefully applicable to all. Without further ado, let’s get into it!
Build a Strong In-House Anti-Fraud Team
The importance of humans in the battle to prevent fraud will never be fully replaced by technology. As such, it’s vitally important to staff up a team of experienced and knowledgeable fraud fighters who can effectively manage systems and help to ensure that you’re getting the most value out of any fraud fighting protocols, or technologies that your business deploys.
So, what will this look like? Well, it’s important to have an operations team, which includes fraud analysts, supervisors, and managers. This team will be on the front-line, reviewing suspicious cases and can be measured by industry standard key performance indicators. Additionally, you’ll need an analytics division, which can be operated as part of the operations team, or as an entirely separate entity.
The analytics division should focus on managing the rules and models that you’re working with to best identify fraudulent behaviour, as well as reviewing any analytical solutions that your business might be using. Once again, the demands on these teams will differ across sectors, and many industries have their own specific naming conventions for these teams, but the function of them remains unified.
Perform a Gap Analysis of Your Current Fraud Controls
Every business’s fraud fighting journey is unique. On paper, two companies can look identical, but they can be at completely different stages in their pursuit of effective cybersecurity and fraud prevention measures. That’s why it’s so important to assess the people, processes, data, and technologies that you currently have in place, and to recognize any potential gaps in your control framework.
The good news is that this process is largely similar for all businesses. As a business leader, you need to be assessing the forms of fraud attacks that are causing your largest fraud losses. Similarly, you need to be evaluating where these losses are occurring in the customer journey, as well as identifying potential solutions that can be used to address the challenge. In doing so, you’ll bring yourself one step closer to stopping the fraudsters.
Always Try Before You Buy
The fraud prevention sector is full of great companies doing brilliant work, but not all solutions are going to be suitable to how your business operates. That’s why I’d always recommend trialling a system out before making a concrete investment. Thankfully, many companies, including SEON, now offer free trials of their solutions, which should be taken advantage of.
Instill Flexibility in Your Fraud Stack
Such is the nature of modern cybersecurity threats, that it’s essential to have more than one fraud technology vendor at your disposal. There’s a real need for solutions and vendors to evolve with the times, which means it’s important to not get locked in with one solution. Instead, look to build a flexible framework, both technically and commercially, which will allow you to easily bring in the latest tools when they become available.
One of the best ways to achieve this is to prioritize API-based solutions, as well as technologies that come without long-term contracts. By doing this, you’re able to go a long way in truly instilling flexibility within your fraud prevention stack. Similarly, always ensure that you’re asking vendors about implementation times and costs, as well as pricing models and contract terms before committing to a specific technology.
Never Stop Learning
Fraud prevention is a discipline and requires time, effort, and patience to master. As a business leader, you must be committed to learning the processes, technologies and trends coming to the fore in the sector. There is a very active fraud prevention community online and some great resources that you can use to enhance your knowledge in certain areas. Take advantage of this and you’ll soon begin to see amazing results.
Personally, I’d highly recommend platforms like the Merchant Risk Council, the Knoble and About Fraud as a great starting point. It’s a unique community, which truly understands the importance of collaboration and as such, is very welcoming to those who want to learn more. Never be scared to ask questions, or to find out how other businesses are approaching the challenge. The fraudsters are always evolving, and so must we!