Why Is Fraud Prevention So Important in 2021?

Fraud Prevention

The year 2020 was interesting and unusual from many points of view. Statistics show that the number of “standard” crimes like car thefts and robberies has decreased, while cybercrimes have significantly increased. The environment of self-isolation and remote interaction gave impetus to new technological development, as well as new ways of stealing data and money. In this article, you will learn what you need to protect your business and customers from, and which fraud prevention solution you should choose.

Fraud Types

Modern scammers keep up with the times and regularly come up with new tricks to cheat merchants and their customers. Nevertheless, all of their methods can be roughly divided into several types.

  • Phishing (fake sites). This one is not new, but it still manages to “catch” inattentive users. Fraudsters create platforms with cheaper air tickets, fake shops, make a copy of a bank website to capture the visitors’ login details, and so on.
  • CNP-fraud. When paying for goods and services by phone or via the Internet, customers don’t have to be physically present during the transaction. It is what fraudsters take advantage of to steal financial data and use credit cards until they are blocked.
  • Stealing traffic or affiliate fraud. This option is possible if an online store has a partnership agreement with other resources. Fraudsters create similar referral links that act as an intermediary and change the direction of traffic.
  • Chargebacks. They are not always fraudulent; legitimate customers have the right to request a refund. However, some take advantage of it to receive products and not pay for them since they allegedly were not delivered. As a rule, in such situations, banks resolve the dispute in favor of customers.

Of course, this list is not exhaustive. Here are some widespread ways that merchants and their clients have suffered the most. You cannot afford to ignore such methods; otherwise, it can result in the loss of money, customers, and reputation.

5 Anti-Fraud Methods

Fortunately, specialized services offer reliable solutions to prevent such fraudulent activities. So which steps can you take to protect both your business and clients?

1. Uphold cybersecurity standards

This solution includes many different directions. First of all, you need to make sure that the hardware and software that you and the employees are using is stable and updated to the latest version. Your company’s website should support a cryptographic TLS protocol, use HTTPS (have a valid SSL certificate), and be PCI-DSS compliant. Also, check and update passwords wherever they are used. Install a reliable password manager if needed. Be sure to make backups and regularly update antivirus software on all of your company’s devices.

2. Implement customer analysis

Before carrying out any financial transaction, you need to check the legitimacy of a client. This is what KYC (Know Your Customer) systems do. With their help, you can determine the reliability of a person at the initial stage (and at every transaction) and take appropriate measures before the fraudsters have time to damage the company and customers. All these processes are fully automated and can be customized depending on the specifics of your business.

3. Monitor visitors’ devices

A technique known as device fingerprinting can help you identify fraudsters and other suspicious individuals based on the data of their smartphones, tablets, and computers. The more the user tries to hide with the help of various utilities, anonymous browser sessions, and other services, the more “unique” they become for anti-fraud systems.

4. Use chargeback protection

While legitimate customers have every right to request a refund for any objective reasons, scammers use it to get a product/service for free. Modern services allow you to identify such payments before the issuing bank reviews the application and confirms the refund. Once notified, you can decide for yourself which action to take. If you think a customer is a crook, you can withdraw your product or service.

5. Make sure there are no backdoors

You should regularly check the site for loopholes in the form of algorithm flaws that allow fraudsters to gain access to confidential data. In addition to periodically penetration testing your systems, it is always recommended to update software to the latest versions and install programs only from reliable sources to prevent backdoors.

Spend Now for Future Savings

The above methods help merchants avoid the financial, legal, and, not least, reputational losses from scammers. Protection against cyber fraud is never excessive, and its work will not affect the usability of your service for legitimate clients. Defensive measures should be used by everyone who has business related to the Internet in one way or another. Of course, introducing new systems requires additional financial costs from you, but they will fully pay off in a short period. Professionals recommend using a comprehensive approach to protect businesses and clients against fraudsters.


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