Machine learning has become an invaluable tool in the fight against fraud. It combines computational statistics, artificial intelligence, signal processing, optimisation, and other methods to identify patterns. Machine learning has been a significant breakthrough in helping companies move from reactive to predictive by highlighting suspicious attributes or relationships that may be invisible to the naked eye but indicate a larger pattern of fraud. The great value of machine learning is the sheer volume of data that computers can analyse that humans cannot, thanks to a variety of pattern recognition algorithms. With this you can add exponentially more data to your analysis -- but selecting the right data and approach to model the problems is critical.
How do you consistently hit a moving target? That's the challenge facing fraud prevention teams as criminals set the sights on credit cards, current accounts, loans and other financial products. Experian's Hunter fraud statistics show that younger people – particularly millennials, many of whom live in blocks of apartments – continue to be the most common victims for fraudsters, yet criminals are also looking elsewhere. Generally, we are seeing fraud against older people rising. Rural dwelling, wealthier homeowners, who make lengthy commutes to work or are retired, experienced nearly a 30% increase in fraud last year.
There is no question about it: the real-time, on-demand economy is disrupting ecommerce. These days, you can order rides, buy groceries, rent a car, make a dinner reservation, and more with a single tap on your smartphone – and each service arrives in as little as minutes. Against this backdrop of speed, more consumers are expecting – and even demanding – a fast and frictionless user experience. The challenge for businesses is to meet these high expectations and stay competitive – all without increasing risk. All types of ecommerce companies struggle with payment fraud, but time-sensitive businesses that fulfill orders in real time face unique challenges.
This editorial was first published in our Web Fraud Prevention and Online Authentication Market Guide 2017/2018. The Guide is a complete overview of the fraud management, digital identity verification and authentication ecosystem provided by thought leaders in the industry from leading solution providers (both established and new players) to associations and experts. Ten years is a long time in the online fraud space. Although the internet has been a way for consumers to transact for much longer than this, it took time for fraud to really make a dent in company profits. As the problem has grown and fraudsters' sophistication has increased, companies have had to balance keeping losses at bay while not impeding growth and future profitability.