In 2023, 84% of large businesses with over $1 billion in revenue experienced fraud, either attempted or successful. Fraud costs businesses an average of 5% of their annual revenue, with merchant losses from online payment fraud exceeding $362 billion globally between 2023 to 2028.
As fraud attempts escalate, businesses can’t afford gaps in their security strategy. Choosing the wrong solution leaves you vulnerable to losses from undetected risk. That’s why investing in fraud prevention software is more critical than ever.
Read on for important questions to ask when evaluating vendors.
10 Questions to Ask When Evaluating Fraud Prevention Solutions
The right fraud prevention system must meet your business needs. To establish that, you have to consider aspects such as business benefits, risk coverage, customization options, scalability, automation capabilities, and ongoing support.
Ask these questions to choose a the best fraud prevention solution for your business:
- How well does this solution protect against different types of fraud? Ensure the solution provides robust security by covering payment fraud, account takeovers, disputes, and other risks.
- Can we tweak the detection rules and settings to fit our business needs? Customizable settings allow alignment with your unique risks, customers, and use cases.
- Will we get reports and insights to understand why certain transactions are flagged? Detailed reporting improves investigations by explaining flagged transactions and informing strategies.
- Does this system use automation to catch fraud, and does it work in real time? Automation that leverages artificial intelligence and machine learning detect and address evolving fraud tactics dynamically and in real time.
- Can it handle more transactions as business grows? Scalability ensures the system supports increased transaction volumes as your business expands.
- Are there tools to help us connect the dots between fraud cases and managing investigations easily? Case management and analysis tools streamline fraud investigations and operations.
- How smoothly will it work with the tools we already use? Easy integrations prevent disruption to systems and workflows.
- What kind of support or training will you provide after we start using it? Comprehensive support and training help maximize the solution’s value and effectiveness.
- Can it stop fraud automatically, or must we step in often? Automation prevents fraud quickly while allowing you to keep oversight for critical decisions.
- Do you have examples of how this has worked for businesses like ours? Case studies demonstrate success in similar industries, proving its reliability and fit.
What are Some of the Types of Fraud Prevention Solutions?
Fraud prevention solutions have evolved from manual audits and rules-based checks to sophisticated systems involving the latest tech such as artificial intelligence, machine learning, behavioral analysis, and instant analytics to detect fraud attempts. Modern platforms provide versatile security while minimizing disruption for trusted customers. The major systems are:
Point Solutions
Address specific use cases, such as device fingerprinting or bot detection. These solutions excel at providing specialized security, however they often require integration with other systems for full coverage.
Decision-as-a-Service (DaaS)
These vendors develop the decision strategy and manage operations for a client without an in-house fraud program. This model reduces development work for your company, but it might limit your ability to customize fraud response rules and maintain direct control over decision-making.
AI-Powered Fraud Platforms
AI-powered fraud decisioning platforms have comprehensive capabilities that evolve alongside the full spectrum of digital risk. They analyze customer behaviors across touchpoints and employ intelligent algorithms to detect suspicious activity. These systems are versatile and adaptable.
Other Platform Solutions
Rules-based platforms are used for certain fraud attacks. These solutions apply predefined rules to screen transactions for fraud indicators and are effective in stable environments with predictable risks. However, they often lack the adaptability and intelligence of AI to detect new fraud schemes.
The Must-Have Features of a Fraud Prevention System
While one-size-fits-all solutions don’t exist in fraud prevention, certain key capabilities should be baseline requirements for any system. Without core functionalities like customization, transparency, automation, and scalability, fraud platforms will struggle to match the needs of growing businesses. Here are some of the must-have attributes to ensure your fraud solution evolves along with your company:
Control
Your chosen system should allow for custom fraud detection rules and flexible decision making strategies tailored to your needs. An ideal platform lets you define risk thresholds that match your risk appetite and configure filters to reduce false positives for legitimate customers. Customization ensures the solution can adapt as your needs change.
Transparency
Clearbox reporting and insights are crucial for understanding fraud patterns and assessing the effectiveness of your policies. A strong vendor provides visibility into key metrics and explains why transactions are flagged, allowing you to improve decision accuracy consistently.
Automation
Top solutions deliver instant, automated actions to block fraud attempts upfront, reducing the need for manual reviews and enabling immediate responses. Real-time learning algorithms speed up detection by identifying emerging threats without human intervention. Higher automation also reduces staff workload, allowing your teams to focus on customer experience.
Scalability
A growing business needs a fraud prevention system that can keep up with increasing demands. The solution should adapt to higher transaction volumes, evolving payment methods, and changing fraud tactics without compromising detection accuracy. Choosing a flexible, cloud-based solution ensures the system can expand effortlessly while maintaining reliability.
Investigation Tools
Effective investigation requires advanced reporting and analytics to streamline workflows. Comprehensive search capabilities, case management features, and visualization tools make it easier to review flagged transactions. These tools help analysts uncover fraud patterns and connections, leading to more informed decisions and stronger fraud prevention strategies.
Why Sift is the Optimal Choice for Fraud Prevention
When considering how to choose a fraud prevention solution, it’s important to look for a system that provides control, transparency, automation, and ongoing support to stay ahead of emerging threats.
The Sift Platform provides comprehensive fraud detection and prevention using instantaneous machine learning and a global data network. Below are key features that make it an optimal choice:
- Provides Control Over Decision Strategies: The solution allows you to customize fraud detection rules, ensuring decisions align with specific business needs and risk thresholds.
- Delivers Transparency: Sift empowers your business to make informed decisions and adjust fraud policies effectively through detailed insights and reporting.
- Offers Scalability: Sift’s solutions grow with your business, adapting to new fraud challenges and increasing transaction volumes without compromising detection accuracy.
- Provides Strong Support and Resources: Sift offers dedicated support and resources to help you effectively manage and optimize their fraud prevention efforts.
Download Sift’s Evaluation Guide for Online Fraud Solutions to gain a comprehensive assessment tool to evaluate your fraud prevention needs.
