An Advanced Approach To Fraud Protection
By KC Fox, Radial
Retailers today continue to face an uphill battle in the ongoing fight against fraud. While wider adoption of the EMV chip and PIN standard has reduced fraud at the point of sale, it has triggered an increase in fraud in other channels — including online and mobile — as criminals look for alternative ways to cheat the system.
There are many types of online fraud, but account-takeover fraud continues to be the biggest threat to online consumers. Javelin’s 2018 Identity Fraud Report found account takeover fraud tripled in 2017, resulting in $5.1 billion in associated losses. By hijacking and gaining access to an online account, fraudsters can leverage online credentials to change account details, make purchases and gain access to other accounts. It’s a costly crime that carries an average resolution time of 16 dedicated hours and $290 in out-of-pocket expenses, according to the report. While the victim of the crime is the unsuspecting consumer, retailers often lose credibility and trust in the eyes of the consumer.
Account takeovers have traditionally been hard to detect — fraudsters are operating a trustworthy user account, making small changes and adjusting their tactics frequently — and as we look to 2019, it will be impossible to ignore.
Retailers need to implement effective fraud management solutions to keep consumers safe. Although automated screening services are a first step, this rule-based system does not evolve over time or react to changing tactics. Protection now requires a much more advanced approach, and in 2019 we’ll start to see retailers leveraging advanced technology to stay one step ahead. Specifically, we’ll start to see:
- Improved machine learning models: Leveraging data science, systems can recognize changing patterns and irregularities in datasets — such as login attempts from different devices or purchasing an unusually expensive item.
- New data sets to improve identification: As fraudsters grow more sophisticated and better at replicating the look of legitimate customers, brands will start purchasing datasets outside of their network to get a more accurate view and better recognize signs of potential account takeover.
- Sophisticated velocity engines to identify fraud schemes: Sophisticated engines can detect account takeover during login to prevent damage before it even begins.
As Senior Vice President, Technology Services, KC Fox heads Radial’s technology team. He is responsible for leading more than 200 retailers and brands to increased revenue and customer loyalty through Radial’s omnichannel technology and payment and fraud solutions. Fox has more than 20 years of experience in the technology space ranging from startups to Fortune 500 brands. Previously, he held various leadership roles at eBay and PayPal where he oversaw the company’s developer platform, advancing the way PayPal integrated with partnering platforms and solutions.