The avenues of fraud are ever-changing. Fraudsters are continuously finding new ways to bypass security and take advantage of its flaws, keeping prevention specialists on their toes. In fact, according to a study conducted at the beginning of 2018 by the Center for Strategic and International Studies (CSIS) and in partnership with McAfee, internet fraud cost the global economy as much as $600 billion. That number is up from the study in 2014 that estimated global losses at $445 million, and it is only continuing to rise.
Understanding the history of fraud can illuminate where we have been and where we are going in terms of cybersecurity and fraud detection, and the lengths to which fraudsters will go for their big payday.
The Evolution of Fraud
In the early days of the internet, online fraud was usually carried out by individuals and could be prevented with rudimentary data-matching systems that improved risk identification. As fraud became more rampant by the early 2000s, fraud prevention companies started to collaborate with each other in order to thwart the growing trend.
As fraud progressed through the decade, so too did the ways in which companies combatted it. Companies began creating a full picture of fraud by tapping into data resources such as politically exposed persons intelligence, sanctions data, criminal intelligence, information of the deceased, and intelligence gathered from email addresses, mobile phones, and other internet-enabled devices. Geographic, social and biometric profiling also helped to create full risk profiles.
At this point, cybercrime became a more serious offense, but some recurring offenders would not be deterred by punishment. Today, we now see fraud activity occurring within organized cybercrime groups that span elaborate networks of people.
With the widespread adoption of the internet and the advancement of smart devices, information is now more readily available and freely exchanged. This makes it easier for fraudsters to find their way in.
Fraud often occurs from scammers or phishers who are posing as other people or charitable organizations in order to get you to send them money or personal information that they then use to hack into your accounts. There is also the use of sophisticated programs that infiltrate your security systems and can take data through a variety of methods.
Even with proper protection, fraudsters are actively seeking new ways to outsmart the latest in fraud defense.
Technology for Fraud Prevention
While investing beyond the bare minimum of fraud protection might seem like an expensive hassle, the alternative of becoming a fraud victim is even more detrimental.
Cutting edge fraud prevention firms utilize artificial intelligence, predictive analytics, and machine learning techniques to combat fraud at its roots.
The rapid growth in API channels, such as transaction risk API, has increased the ability to protect against and predict fraud before it occurs.
Fraud prevention is no longer a “do it alone” option. Businesses should engage in best-practices when handling and storing data and defer to reputable businesses with a specialty in data collection and analysis, and security system reviewal.
The best approach to fraud detection and prevention is a multi-layered one with checkpoints at several points along the data route.