Improving Fraud Detection: Rules versus Models - Feedzai

It is standard practice in managing payments to block potentially fraudulent transactions via a set of rules. These rules can be very effective in mitigating fraud risk, and practitioners in the industry are comfortable with this approach. Quite often these rules are able to mitigate the losses from fraudulent transactions without producing a correspondingly high alarm rate. For example, a fraud team might create rules based on a location and block transactions from risky zip codes. They might also create rules to block transactions from cards used too frequently by blocking any transactions for cards with more than 4 previous transactions in the past 30 minutes.