This is part one of a three-part blog post series highlighting some of the key things to look for when it comes to choosing a third-party fraud prevention solution.
Last quarter, we released our DataVisor Fraud Index Report which provides insights into the activities of fraudsters and malicious actors around the world. We also published an infographic that highlights the tools fraudsters use to build armies of attackers that commit numerous types of online fraud. Modern fraudsters use sophisticated techniques to commit online fraud, so it is crucial that every company conducting business online implement the most effective solution for preventing online fraud.
Here are just some of the key things to look for when choosing a third-party fraud prevention solution.
Multiple Layers of Protection
One of the things to look for in a fraud prevention solution is multi-layer protection. What we mean by multi-layer protection is that the solution can perform fraud analysis at both the user level and the event level. Many vendors in the fraud prevention space only focus on the event level e.g. transactions and payments. A fraud prevention solution must not only detect transactional fraud but also analyze user behavior- it must look at the bigger picture when it comes to fraud. There is also a social component to fraud. Consumers do not just purchase items online, they also connect with and share content with other consumers. The vendor must understand this social component as well.
An effective fraud prevention product also handles multiple types of use cases. Some vendors are siloed into one form of fraud, payment fraud for example. Today, there are numerous types of online fraud. Companies must implement a solution that can handle multiple types of fraud. For instance, card-not-present (CNP) fraud, new account fraud, and account takeover (ATO) fraud.
Excels in Specific Areas
Companies should look for a product that is targeted and does well in specific areas. For example, DataVisor specializes in several areas of fraud prevention including financial fraud, social commerce, mobile applications, and anti-money laundering. The product should be able to handle multiple types of fraud in the areas in which the vendor specializes.
When it comes to fraud prevention, many companies often find it necessary to implement products from multiple vendors. In fact, many of our customers work with multiple vendors. Every third-party fraud prevention product has its strengths and weaknesses. The way in which products are combined is what makes an overall fraud prevention solution powerful.
Global Reach and Data
Fraud indicators vary from country to country. So, vendors must understand the fraud indicators that occur in the U.S. and the fraud indicators that occur abroad. Vendors must have fraud data that spans the entire world so that their products can analyze and prevent fraud for transactions worldwide.
Another thing to keep in mind is that certain data types may not indicate fraud by themselves. But when combined, could become indicators of fraud. For example, an app user whose location is in the U.S. but owns a device that is only sold in China would be labeled as suspicious if both attributes are analyzed in combination. Each of these attributes on their own might not necessarily be marked as suspicious if the solution does not analyze the relationship between the two attributes.
To Be Continued
Additional key things to look for when it comes to choosing a third-party fraud prevention solution are explainability, engaging visualizations, and data privacy processes which are covered in the next blog post.