A Consolidated Approach to Fraud: Bringing Together Risk Insights, Organizations and Technology

By Kimberly Sutherland, vice president, fraud and identity strategy, LexisNexis® Risk Solutions

Digital fraud has seen a substantial increase in recent years, mainly due to the sharp rise in digital transactions. The proliferation of various digital channels and payment formats, including those employed for in-store purchases as consumers return to physical shopping locations, has provided added convenience for consumers and enhanced flexibility for businesses.

Nevertheless, fraudsters are keeping pace and have devised new methods to target both consumers and businesses with progressively sophisticated fraud attacks. Their operations have evolved into intricate networks, where every piece of information is interconnected, forming a valuable link in a vast global chain.

To effectively counter fraud, businesses need to gain a deep understanding of their trusted customers. This empowers organizations to enhance the digital experience for legitimate customers while focusing their efforts on scrutinizing other activities to spot potential attacks. Achieving this goal entails augmenting fraud intelligence by developing a comprehensive perspective of each customer’s journey and fostering collaboration and information exchange with other entities.

360-Degree View of Your Digital Customer Base

A 360-degree view requires gaining a comprehensive and holistic understanding of customers by incorporating risk insights from various touchpoints throughout their digital interactions with a business. The objective is to seamlessly integrate and analyze seemingly disparate information from diverse sources to construct a unified customer profile. This includes information gathered from websites, mobile apps, social media, email communications, customer support interactions, online purchases and other digital channels.

As an illustration, financial institutions often draw a distinction between digital banking risk and Card-Not-Present (CNP) transaction risk assessments, even though there is no inherent necessity for this differentiation.

According to findings from the LexisNexis Risk Solutions Cybercrime Report, an average of 82% of consumers who engage in online shopping with their credit cards are also active users of online banking services provided by the same bank. This presents an opportunity to share digital identity intelligence seamlessly across channels, fostering trust and preventing more intricate forms of fraud.

Consequently, this approach enables a comprehensive understanding of each customer’s interactions, preferences and behaviors, irrespective of the channel they choose.

Ensuring precision in the digital intelligence gathered from these diverse channels is paramount. This involves seamless integration of information collected from each touchpoint rather than compartmentalizing it within disparate systems. In the realm of ecommerce, this also entails leveraging the same digital intelligence for risk assessments across digital channels and extending its use to physical stores where customers can access digital payment methods via an app.

The real-time amalgamation of offline and online insights can prove instrumental in identifying potential attacks during their nascent stages, enabling swift responses. Furthermore, organizations should transition from single, point-in-time risk assessments to developing risk profiles that encompass all three pivotal stages of a customer’s lifecycle, including new account creations, logins and payments.

Crafting a comprehensive customer profile serves as a deterrent to fraudsters seeking to exploit vulnerabilities through multi-channel attacks. For example, delivering a real-time, in-app message to the end-user or customer can confirm an unusual payment, verify that no coercion is involved and facilitate a final sanity check to thwart attacks. By maintaining a holistic perspective on customer interactions, businesses gain the ability to detect potentially fraudulent behavior in its infancy at every juncture of the customer’s journey.

Collaboration and Information Sharing

Fraudsters frequently set their sights on multiple organizations at the same time and their activities can extend across various industries and sectors. To counter this threat effectively, organizations can engage in collaboration and information-sharing among themselves, exchanging insights regarding known fraudsters, attack patterns and emerging threats.

By uniting risk insights through a consortium, organizations and technology, businesses can establish a stronger defense against fraudulent activities. Integrating insights from diverse sources and organizations facilitates the development of a cohesive fraud detection system. This approach empowers businesses to scrutinize risk signals from numerous touchpoints to uncover fraudulent activities that might otherwise elude detection when analyzed in isolation.

The prompt exchange of risk intelligence plays a pivotal role in swiftly detecting and responding to fraud. Leveraging technology to enable real-time sharing empowers organizations to take immediate actions against potential threats, minimizing the impact of fraudulent activities.

Advanced machine learning algorithms and artificial intelligence-powered models continually evolve by learning and adapting to new fraud tactics in real time. The challenge frequently centers on guaranteeing the availability of all signals throughout the user journey within the same system as the fraud detection models, while also ensuring access to consortium intelligence. Only through this integrated approach can these features collaboratively function, with appropriate weightage assigned to each, without adversely affecting genuine customers.

The heightened attack rates we observe at present are unlikely to diminish, although investments in public education regarding the risks of scams, increased regulatory oversight, and ongoing technical innovation hold the promise of stabilizing these attack levels, potentially leading to a plateau.

The challenge facing organizations, industries and the U.S. financial ecosystem lies in the ability to seamlessly integrate digital intelligence. This involves identifying interconnected signals within the intricate web of a complex fraud attack as it unfolds, comprehending the behavioral anomalies it unveils and tracing the subsequent financial transactions.

The encouraging news is that there are already instances of success, including machine learning-optimized scam detection models achieving high detection rates, organizations collaborating to share real-time intelligence to prevent repeated attacks by organized fraud rings and the apprehension of mule herders leading to the closure of mule accounts. However, it is imperative to expedite these initiatives and actively engage in the battle against cybercriminals.

About the Author

Kimberly Sutherland is vice president of fraud and identity strategy at LexisNexis® Risk Solutions. Based in Alpharetta, Georgia, she leads the commercial market strategy for consumer fraud analytics, identity verification, authentication and fraud investigations for LexisNexis Risk Solutions in the U.S. and Canada.

Sutherland has more than 20 years of experience leading business strategy and product management with responsibilities spanning from building global professional services practices to developing cross-industry best practices and technical standards.

Sutherland was recognized as one of the Top 100 World Leaders in Identity and served as the past Plenary Chair of the Identity Ecosystem Steering Group (IDESG), a White House initiative under President Obama to improve the trust and security when transacting online. Sutherland also serves as the vice chair of the Open Identity Exchange (OIX) and on the boards of Women in Identity and the University of Texas – Center for Identity. Recently Sutherland was recognized as one of the Top 50 Women in SaaS by The Software Group and Cybersecurity Woman of the Year in North America by the Cybersecurity Excellence Awards.

adonSutherland is a graduate of Vanderbilt University and Otterbein University.