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August 18, 2021 - Claire Zhou

4 Trends in the Online Fraud Detection Market in 2021

Online fraud detection and prevention continues to be an evolving landscape for financial institutions and merchants. It also remains a priority with an ability to drive value across a number of use cases, from banking fraud and digital commerce fraud to bot mitigation and device intelligence. 

Part of harnessing the capabilities of online fraud prevention is understanding the trends and technology driving these initiatives forward. These key findings show organizations where to allocate resources and make decisions that will increase ROI and reduce operational costs and complexities.

Here’s a closer look at some of the current trends in the online fraud detection market.

Sharing Data Between Merchants and Banks Increases Fraud Prevention

High false positives that decline good customers ultimately erode profitability for merchants and banks alike. One reason for this is that each transaction is screened for fraud twice: once by the merchant and once at the point of authorization by the card-issuing bank. Often, these screening processes use different vendors and processes and can be in conflict with each other. 

Conflict resolution may come in the form of an API, where data is shared between these two endpoints. With this technology, authorization rates increase and false positives are reduced. 

Interest is Growing in Device Location Intelligence for Mobile Banking

Device location is being scrutinized as a key piece of the mobile banking fraud detection puzzle. Gartner shares that more than 90% of mobile banking logins occur from a “trusted location.” Logins that occur in locations outside of a customer’s trust profile can indicate fraud attempts on a customer’s account, which signals to the bank to step up authentication requests.

Vendors like DataVisor that can offer spoof-proof device intelligence are providing location data that is more robust, even when emulators are being used or device information is being altered. This can also be a useful tool in bot mitigation when numerous fraud attempts are being made on a large scale.

Digital Commerce Differentiation Emerges through Addressing Policy Abuse

Online merchants are expanding their focus on payment fraud to also include forms of policy abuse, such as promotion abuse, reseller abuse, and return and refund abuse. Return abuse alone is estimated to cost online businesses $7.7 billion in 2020, reaching a similar magnitude as fraud losses. 

Tools like DataVisor enable these efforts by providing trustworthy device fingerprinting and behavior patterns to detect policy abusers.

Confidence Grows for Vendor-Hosted Transaction Monitoring Tools

More banks are migrating away from on-prem technologies in favor of vendor-hosted transaction monitoring solutions. This shift helps to lower operational costs and complexities for the bank. It also serves as a testament to the confidence banks have those vendor-hosted solutions that will provide the high level of data privacy and security they expect as well as efficacy in detecting and preventing fraud. 

Turning Trends into Actions 

DataVisor remains on the cusp of the online fraud prevention market, offering tools that support each of the above trends in a scalable and consistent manner. 

A recent Gartner report reinforces these banking fraud trends and digital commerce trends, as well as technologies like DataVisor that enable them. Download the Gartner report to learn more

Photo of Claire Zhou
about Claire Zhou
Claire is a Senior Product Marketing Manager at DataVisor with over 5 years of marketing experience in security and fin-tech. She is passionate about empowering enterprise customers with AI-based solutions. Her expertise spans data analytics, cybersecurity, and fraud prevention. Claire has an MBA from UCLA.
Photo of Claire Zhou
about Claire Zhou
Claire is a Senior Product Marketing Manager at DataVisor with over 5 years of marketing experience in security and fin-tech. She is passionate about empowering enterprise customers with AI-based solutions. Her expertise spans data analytics, cybersecurity, and fraud prevention. Claire has an MBA from UCLA.