A holistic fraud management strategy that involves multiple stakeholders and evolves with organizational needs can be a competitive advantage. Leading research and advisory firm Gartner recommends aligning your strategy with organizational priorities — profitability, maximizing revenue or signing up a large number of users, for example. Asking the questions below can help you form a common framework that aligns your stakeholders around a shared objective.
Payment fraud has been a constant issue for digital commerce businesses and financial institutions reliant upon electronic transactions. Combating it has taken on greater urgency in the wake of COVID-19 as social distancing drives a rise in online transactions and subsequent fraud. A TransUnion global analysis found risky transactions for ecommerce increased 12% since COVID-19 was declared a global pandemic in March.
Any false or illegal transaction conducted online that deprives a consumer of funds, personal property, interest or sensitive information is considered payment fraud.
Understanding the various techniques fraudsters employ — phishing, identity theft, advanced fee and wire transfer scams, merchant identity and card not present fraud, to name a few — can help you pinpoint vulnerable areas and implement effective mitigation strategies.
Increased rates of fraudulent or unauthorized transactions will impact your business in some form, whether by loss of revenue due to theft, refunding victims of fraud, wasting resources on false requests, or damage to your reputation. What you don’t want is your investment in tools and resources to reduce these rates to outweigh the results.
Knowing how much fraud costs your organization is an important step in determining where — and how much — to invest in detection and prevention, and how to align your fraud strategy with overall goals.
Payment fraud reaches across the entire organization, involving many stakeholders with different needs and challenges.
Your customer experience team knows cumbersome authentication processes and fraud controls can lead to higher dropout and abandonment rates. Finance can be focused on the costs of fraud management tools, while compliance and security may be concerned you’re not investing enough.
It may not be possible to fully align all these needs, but by considering appropriate stakeholders, it’ll be easier to make collective decisions that match up with organizational goals. And you’ll likely need input from various areas of the business to help answer the first two questions as well.
Implementing fraud strategies that drive down total cost of fraud
As businesses adapt to meet shifts in both consumer behaviour and fraud patterns in digital channels, it’s never been more important to understand and assess the financial impact of your fraud strategies.
TransUnion can help you with authentication and identity solutions. Our IDVision® with iovation® product suite combines data science with identity, authentication and fraud solutions to provide unique insights about consumer transactions. For more information on how we can help your business, visit transunion.ca/idvision
To learn more about Gartner’s view on the subject, download your complimentary copy of How to Create a Payment Fraud Detection Strategy at the Organizational Level today.