5 Signs You Might Need A Fraud Prevention Solution

Whether you’re an established online business or just started a new one during the pandemic, you might have noticed something strange with fraud rates.

Every business is now impacted and this may lead you to wonder what the best solutions are. But before you jump the gun and start comparing different fraud prevention tools, it’s important to make sure you really need one.

Here are X signs that you should really consider investing in a decent fraud prevention solution today.

#1 Your Chargeback Rates Are Going Up

Any online business that processes transactions will be familiar with the problem of chargebacks. Put simply: it’s when a cardholder disputes a transaction for a number of reasons:

• They say they never made the transaction
• They lie about it
• Someone stole their card and bought something with it

There are cases of clear fraud, and what we call friendly fraud. Friendly fraud is what happens when the cardholder did make the purchase, but changed their mind and triggered a chargeback dispute to get their money back.

The bad news: chargebacks are really expensive for online businesses. The card networks will make you pay for the admin fees, plus you have to refund the customer out of your own pocket. In some cases, you even have lost a good or service for no reason.

The good news, however, is that chargeback prevention is really easy to do with the right fraud prevention tools. You don’t need much technical knowledge, and you can use something like a data enrichment solution to learn more about your customers before they make the transactions.

Best of all, this also works for cases of friendly fraud, when you can identify suspicious activity on an account before the transaction goes through.

#2 Your User Accounts Keep Getting Hacked

In the fraud prevention world, this is called an account takeover, or an ATO attack. It simply means that someone with bad intentions managed to log into one of your users’ accounts. This is bad news for a number of reasons:

• They can drain the account of funds (if you have credit points, crypto or money in there)
• They can mine the account for personal information (which could make you liable for a data breach)
• They can infiltrate your business and cause all kinds of damages (if they managed to get a remote team member’s login details, for instance)

In this scenario, there are a few things you can do without a fraud prevention tool. For instance, you can employ 2FA, and educate users about the value of their accounts.

But here again, fraud prevention tools can be a great help. You can use them to monitor the login stage, and make sure nothing suspicious is happening there.

For instance, you could have your system running in the background to check that there aren’t too many attempts with a wrong password, that the IP address is consistent with previous logins, and that the operating system and browsers are also recognised.

#3 You Have Problems With Fake IDs

In this day and age, it’s easier than ever to find fake ID documents online. They are widely available in huge databases on the darknet, and you can also find hundreds of websites that offer to create a Photoshopped selfie ID using your preferred information.

The point is that ID verification doesn’t really work if you only look at the actual documents. The solution is to create a full profile of your users, for instance by looking at their social media presence, or using IP analysis.

This is actually one of the best reasons to look at fraud management software, as you will be able to gather a lot of information in the background, without asking your customers for extra verification steps (which could send them towards competitors).

#4 You Need KYC and AML Compliance

KYC, or know your customer, used to be part of the financial jargon only, but these days more and more businesses need to know the basics. The same goes for AML or anti-money laundering, which are regulations put in place by certain government bodies.

The key to being compliant is to gather data about your users. How you do it, however, is where all the power of fraud detection solutions come into play.

If you ask users for too much information in the form of data fields, they may think your process is too heavy, which could slow down your onboarding process. However, if you can gather all that data silently in the background, you can meet all the right checks without adding a ton of friction for your valuable users.

#5 You Have Problems With Some Affiliates

Affiliate marketing is increasingly popular for online businesses these days, but the problem is that some unscrupulous individuals will try to abuse your program.

This is something we’ve seen a lot – even with big companies like Uber. Marketing publishers say they can help with app installs, and actually use shady tactics to boost their numbers and earn more commissions.

If it’s a problem you face, you can also use a fraud detection engine to look at the quality of the traffic and conversions on your site. It can be about adding more subscribers, selling more goods and services, or even simple PPC (pay per click) reward schemes.

Key Takeaways

Whether you work in ecommerce, online lending, iGaming or other verticals, one thing is for sure: fraudsters will soon try to exploit your business.

While there is no magic bullet to stop all fraud attacks, it’s possible to get a lot of valuable information about your users, affiliates and bad agents simply by creating monitoring points on your site.

This is exactly what an advanced fraud prevention engine will allow you to do, and they’re now more affordable and easy to integrate than ever – you should click here for more information today if you’re interested in taking measures to detect or prevent fraudulent actions from happening in your business.