Training Your Sights on Online Fraud

The increased sophistication and determination of contemporary fraudsters continues to up the ante with insidious pernicious attacks that keep account providers on the defensive. As organized gangs create synthetic identities, spoof location and perpetrate massive automated attacks, account providers must be diligent in providing the best security possible.

Fraud is big business. Well-funded, well-orchestrated, sophisticated fraud rings aggressively change tactics and invent new technologies to cash in on the unprotected assets awaiting plunder.

Every organization that provides individual service to its customers, employees, members or community is faced with the very real concern of gaining and keeping their users' trust. Public awareness of phishing attacks, identity theft and online fraud makes informed users wary of disclosing personal information without strong assurance that their data is safe and that the entities with which they interact are what they claim to be.

The economics of doing business online are compelling. However, online fraud and identity theft continue to rise. Customers are increasingly aware of the potential risks associated with disclosing personal data, which is having a dampening effect on their willingness to transact online. Savvy organizations understand that they can't sit idly by -- they must aggressively fight the fraud and they must simultaneously educate and assure their customer base, providing visible, additional measures to insure and reassure their communities that transacting business online is safe.

Recent Aberdeen research has shown that those organizations that are getting the best results in both growing user confidence and reducing fraud have over the last 12 months been able to reduce the number of incidents of fraud and reduce financial loss attributable to fraud. Simultaneously, they were able to increase the number of user accounts, the number of online transactions and the number of online transactions per user.

Survey results show that the top performing firms enjoying Best-in-Class performance share several common characteristics:

Ninety-two percent authenticate users at the creation of the account;
Eighty-four percent use encryption; and Sixty-eight percent monitor transactions.

Preventing Fraud in Real Time
Although the No. 1 goal cited by Best-in-Class organizations is to increase or sustain account holder confidence, close on its heels is to protect account holder data. Indeed, these two strategies go hand in hand but require different initiatives and focus.

A significant advancement in thwarting fraud is being made by trying to identify the fraud while it's taking place rather than after it's happened. To this end, organizations are using varied technologies to provide data for real-time analysis and reporting. Organizations that use real-time reporting and analysis and avail themselves of the use of an antifraud directory are getting better results than those that don't.