Losses to online payment fraud are continually increasing, expected to grow from 41 billion US to 48 Billion USD in 2023 and increase by 131% over the next five years. With smart devices becoming increasingly available to most consumers and online activity increasing, transactions are more vulnerable than ever, with more vectors for fraud attacks.
Fraudsters can cause significant damage to businesses and customers by exploiting security vulnerabilities, leading to financial losses and reputational damage. Fortunately, tools are available to help prevent fraud, such as fraud filters.
What is a fraud filter?
A fraud filter is a tool to prevent fraudulent transactions from being processed. Fraud filters use a combination of algorithms and rules to analyze various data points related to a transaction, such as IP address, device information, shipping and billing address, and more. These data points are evaluated against known fraud patterns and stolen credentials, helping identify fraudulent activity.
Some common ways companies use fraud filters include:
- Analyzing transaction patterns: Fraud filters can flag transactions that appear unusual compared to a customer’s regular spending habits. For example, if a customer starts making much larger or more frequent purchases, a filter may flag this as potentially fraudulent.
- Monitoring suspicious account activity: Banks and fintechs may use filters to alert their fraud and risk team of unusual account behavior, such as multiple failed login attempts or several large money transfers.
- Machine learning: Filters can help financial institutions analyze transaction data, identify fraud patterns, and learn from past fraud cases to adjust their rules.
- Real-time risk assessment: Banks can rapidly risk assess incoming transactions for their likelihood of fraud. A filter may cancel the transaction or flag it for manual review if the risk meets a certain threshold.
As a result, businesses reduce their risk of financial losses and reputational damage caused by fraudulent activities while ensuring a secure experience for their legitimate customers. And they can avoid friction for legitimate customers while filtering out bad actors.
What types of companies typically use fraud filters?
Any business that accepts online payments and processes transactions through its website can benefit from a fraud filter, from banks and fintechs to businesses that sell physical goods, digital products, or services. More specifically, banks, fintechs, payment providers, and similar financial institutions process a high volume of transactions and are often targeted by fraud – so, they benefit a great deal from tools like fraud filters.
With financial fraud schemes increasing and online spending skyrocketing, having a robust fraud prevention strategy is more important than ever.
How does Fraud.net use fraud filters?
Fraud.net’s platform uses advanced machine learning algorithms and rules-based analytics to identify potentially fraudulent activity and analyze a wide range of data points related to a transaction to identify patterns of fraudulent behavior and can flag potentially fraudulent transactions.
By leveraging millions of data points and the industry’s leading solution providers, Fraud.net’s machine learning algorithms can quickly and accurately risk score transactions in less than a second for fraud teams to easily make decisions on. And their machine learning engine learns from each approved or denied transaction in future risk scoring of a particular event.
Suppose a transaction is flagged as potentially fraudulent by the fraud filter. In that case, Fraud.net offers a range of additional tools and services to help businesses investigate and resolve the issue, including real-time alerts, case management workflows, and access to a global network of fraud experts who can provide additional support and insights. Our company also offers an auto-cancel feature for transactions that trigger volume or location rules and risk score thresholds.
As a result of using our fraud filtering platform, customers have enjoyed an increased ROI, reduced time to review, reduced false positives, and, most of all, protected profits. To learn how Fraud.net’s tools can help you achieve the same, schedule a free demo with our solutions consultants today.
