Fraudsters will use many tactics to get past your organization’s defense system. These continuous attacks have made organizations rethink about their online security and take protective measures against it.
The PWC mentions that more than 50% of organizations claim that they experienced the highest fraud rates in the past two years than ever before. Therefore, it’s more important than ever to take the necessary measures against fraud.
Let’s dive deeper into this article to learn more about which fraud monitoring strategy you can use to prevent fraud.
5 Fraud monitoring strategies you can use for preventing online attacks
Fraud monitoring is an important part of protecting your online business from threats. As technology keeps improving, it’s easier for you to detect fraud and stop it before it’s too late. Therefore, we are going to learn more about the fraud prevention strategies you can use to do this.
1. Real-time transaction monitoring
The world’s payment systems are evolving so fast that it’s hard to keep up with what is going on. Customers love to purchase online and are doing it more than ever before. A good way to monitor fraudulent activities is to implement a real-time payment processing system.
While it’s a great service for customers and online business owners, it’s also a great way to monitor money laundering activities and detect fraud early on. Fraud doesn’t only damage your business reputation, it can lead to big financial losses as well.
Companies will implement an anti-money laundering (AML) transaction monitoring service for converting data that has to do with suspicious activities. An AML transaction monitoring service will do the following:
- Monitor false positives: Always keep an eye on false positives. Some fraud claims might not be entirely true and you don’t want this to happen. False positives can interfere with genuine purchases.
- Monitor revenue changes: Real-time analytics allow you to identify which type of transactions occur on a site. Processors and merchant acquirers can show retailers the transactional details and whether it was approved or not, and if there are any slow processing times. Changes in processing times can also dictate fraud.
Real-time transaction monitoring needs to be done correctly and not negatively affect the customer experience.
2. Choosing the right fraud detection software
A fraud detection software monitors and blocks fraudulent activities on your site. Fraud prevention software operates on the following framework:
- Monitoring: The software gives you in-depth analytics on all of your users while they are on your domain. It shows you the device they are using and their IP address.
- Investigation: You need to learn more about your users before concluding anything. Data enrichment helps develop an opinion on fraudulent activities and a risk score. The risk score shows you how dangerous an order might be before it’s processed.
- Blocks: Fraud detection software will give you an option for automatically blocking user actions based on their risk score. The higher the score is, the more chances of them getting blocked.
Each fraud detection software is different, but the best ones will offer you much richer features you can for preventing fraud in the future and reducing false positives. Here are some examples of what the best fraud detection software has to offer you for reducing cyber threats:
- Risk rules and scoring: We mentioned the risk score before. Many fraud detection software will usually block off all IP addresses associated with a VPN. A risk score will increase once it sees suspicious activities, such as a user paying from a different country than stated on their credit card.
- Machine learning (ML) capabilities: ML is a subset of AI and will analyze data and suggest risk rules based on what it sees in the data.
- Real-time transaction monitoring: Anti-money laundering (AML) regulations closely monitor real-time payments. Payments that seem suspicious are blocked off before they’re processed. A common sign would be slow processing times.
After you find out that the fraud detection software you are looking for has the required features you need, it’s now time to compare prices between each software. Software that is more expensive doesn’t always mean it’s better.
3. Implementing multi-factor authentication (MFA)
99% of MFA strategies can stop cyber threats. MFA stops fraud by making it more challenging for fraudsters to access user’s accounts and control them. A single-factor authentication is much easier for a cyber criminal to access compared to a multi-factor one. This is because the MFA requires the user to prove more than one point when trying to log in.
No fraud prevention solution is 100% effective because cyber criminals always find a way to overcome them, but MFAs are generally hard to breach. They require too much effort and in most cases, online attackers will give up on them. After all, cyber criminals always go after easy targets.
Overall, compared to single-factor authentication, MFA provides you a much better level of security and is a great anti-fraud strategy to implement.
4. Data encryption
Data encryption ensures that the user’s ID is protected from cybercriminals. When you encrypt data, you need to follow a set of rules based on what the local government is asking for. Here are the most common encryption rules you should know about:
- You need to understand where and how the attack is coming. Always research more on which type of software most cyber criminals are using. It can help a lot in future encounters.
- Decide which data is most important for encrypting. This way, you’ll know which data is most valuable for protection.
- Make sure to encrypt your data when it’s in transit because encrypting it on your network is highly complicated and challenging.
- Regularly backup your data since you never know when you might face a cyber criminal attack
- Authorize who you are sharing your personal information with
- Create strong passwords and have a good antivirus software in place for detecting any possible fraudulent activities
There are anti-identity theft laws that exist which you can use to protect your organization against fraud. However, it’s important to ensure that the information you’re collecting is accurate. Consumer credit card information is collected and used through the Fair Credit Reporting Act (FCRA).
Secure your passwords, use a MFA where possible and the FCRA will also assist you against any cyber threats.
5. User access management
If you don’t know, poor access management can lead to internal fraud. Internal fraud can happen for a number of reasons, but some of the main reasons are employees seeking revenge.
Growing businesses should carefully assess access management. This is because they are adding more devices to their workflow and you don’t want the wrong person getting access to sensitive information.
User access management has four components and they are:
- Single Sign-On (SSO): Provides a simplified way for users to access the resources they are looking for. It helps by eliminating the need of entering the same credentials over and over.
- Multi-factor authentication (MFA): Two-factor authentication is part of user access management and requires users to enter at least two different methods for confirming your ID before you are granted access.
- Role based access control: A huge part for granting special privileges to users based on the roles they have in the organization. Users receive privileges they need based on their role in an organization and how trustworthy they are. This reduces the risk of granting the wrong privileges.
- ID lifecycle management: Manages user’s IDs across different systems and apps. Thai doesn’t only involve managing user accounts, but assigning permissions to suitable users. The ID lifecycle management also helps you comply with important data privacy rules like the General Data Protection Regulation (GDPR), Health Insurance Portability and Accountability Act (HIPAA), and others.
Many organizations don’t have the proper user access management system and this might be a headache for the workflow system. Moreover, the most important thing is to know that your access management tool is reliable and has a suitable software solution.
Fraud is becoming a big issue
Fraud is becoming a global issue and the worst part is that many cyber criminals are always finding new ways to breach your anti-fraud system. Even though they’ll always go for easy targets, experienced online attackers won’t give up on their mission.
Therefore, take the necessary steps by using anti-fraud software, providing real-time transaction monitoring, MFA and all the other important practices we mentioned.