As online fraud detection grows beyond traditional use cases, businesses are faced with the difficult challenge of navigating the online fraud detection market. To help risk management leaders get an objective view of the current fraud prevention landscape, Gartner® has published the latest 2022 Market Guide for Online Fraud Detection.
Discover three key takeaways from the report, highlighting some of the most important qualities security and risk management leaders should look for in a fraud detection solution.
Global networks are key for effective fraud detection
One of the reasons I joined Sift was because of the power of the global data network. While working at companies like Google, Square, and Facebook, we had a wealth of resources to fight fraud, but no matter how world-class our fraud prevention was, fraudsters didn’t give up. Operating in the global, interconnected Fraud Economy, these cybercriminals quickly move on to another attack vector or the next target, looking for new ways to exploit security gaps. This is why the data network is so important. When companies are targeted, they can unite forces and share information about the attacks to prevent others from facing the same challenge. This will put businesses in a better position to mitigate risk and reduce losses due to fraud. And for most mid-sized businesses that don’t have the resources to effectively fight fraud on their own, having access to machine learning and a global data network is a game changer.
For example, Sift’s global data network processes billions of events every month across every industry, every region, and every fraud vector. This means that when a new fraud pattern pops up in one corner of the globe, the rest of the network knows about it within 250 milliseconds. These shared insights are surfaced and analyzed in real time to improve fraud detection for the entire network, so merchants no longer have to learn about new attacks the hard way.
As Gartner states: “Fraudsters often operate within specific geographical regions and typically target organizations with the weakest countermeasures. Once an attack pattern has been stopped or is no longer relevant, fraudsters either change their tactics or switch targets. Thus, it is imperative that an OFD (Online Fraud Detection) platform can learn and improve from confirmed loss events within specific geographies (ideally across borders and globally), not just within a single organization. This requires the platform to have the ability to share anonymized telemetry about users, devices, and event outcomes (particularly confirmed frauds) across an entire network and for all customers. Systems, policies and algorithms can then be updated in real time to defend against evolving threats.”*
Businesses must leverage multiple fraud prevention capabilities
The internet has grown up a lot in recent years, with more and more of our identities being stored online. This is great for consumers, but also comes with risks. The surface area and windows for attack have grown at a staggering rate, and businesses now need more flexible tools to keep up. It’s no longer just about protecting payments—securing logins and monitoring behavior is just as important. With the recent onslaught of data breaches, you’d be hard pressed to find someone not impacted by at least one. And although it’s on consumers to practice password hygiene, it’s ultimately on businesses to maintain safety on their platforms. To do so, businesses should leverage multiple fraud tools that can be linked together, like Sift Connect, to reduce silos and improve performance and measurement.
To effectively get out ahead of rapidly evolving fraud, businesses need comprehensive fraud prevention solutions. Gartner says: “Detecting fraud in digital channels is a challenge, due to the competing requirements of dealing with emerging attack vectors and delivering a smooth user experience. Security and risk management leaders must orchestrate multiple capabilities to create dynamic user journeys, while minimizing risk.”*
Leaders shouldn’t stop at reducing fraud rates
During economic downturns, consumers focus more on basic necessities like getting food on the table—and businesses should take the same approach. When every sale matters more, it becomes crucial to manage business wisely, including enabling transactions and reducing false positives. Companies must not only prevent fraud, but also prioritize making quality customers happy. Maintaining a safe platform is a necessity in today’s market, and merchants have the opportunity to stand out by making the login and transaction process as simple as possible.
As Gartner states: “Keeping fraud rates down is a baseline expectation for [security and risk management] SRM leaders. They can achieve differentiation by also delivering a good UX for most users. This implicitly means reducing false positives when blocking user actions or increasing friction to elevate trust. Reducing operational complexity remains a constant imperative.”*
Digital Trust & Safety is built upon these two core principles: preventing fraud and enabling growth. At Sift, we enable proactive fraud prevention across a variety of use cases and fraud types—including account takeover (ATO), payment fraud, and content abuse—as well as a frictionless customer experience for trusted users.
*Gartner, Market Guide for Online Fraud Detection, Akif Khan, Dan Ayoub, 12 December 2022
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