While there are many negative things to be said about online fraudsters — starting with the fact that they’ve made their lives’ work stealing from other people — among their more pernicious features is something that in other contexts might be taken for a positive trait: Fraudsters are an extremely hardworking, efficient and proactive group.
For every solution, lock-out and detection method white hats come up with, there is a black hat out there somewhere figuring out a new access point, work-around or vulnerability to go after. Cloned card fraud no longer an easy option because of EMV chips? No problem, says fraudsters — time to go online, where cards are never present and the opportunities to use stolen personal data abound.
The ever-evolving nature of the digital crime ecosystem creates two problems, according to the fraud fighting experts at Forter — one obvious, one less so.
The obvious issue is the fraud itself, coming at digital merchants from many angles in an ever-evolving, more sophisticated form. Losses are a bad thing, Forter notes, but very few merchants really need that explained to them.
The less obvious issue in play is fear of fraud — and the worry that retailers’ attempts to be as proactive as the fraudsters trying to steal from them is causing an overabundance of caution that is turning perfectly good transactions away in an attempt to stave off the bad ones.
That is a problem that required innovation — because, Forter notes, merchants thinking about fighting fraud are merchants thinking about the wrong thing instead of doing what they are really in business to do, which is enable as many (good) transactions as possible.
“By removing the fear of fraud, which causes way more damage than the actual fraud to merchants, we enable them to accept way more transactions,” Forter CEO Michael Reitblat told PYMNTS.
Out-Innovating The Maliciously Innovative
The problem with looking for silver bullet fraud solutions, according to Forter, is that it misses the most fundamental defining feature of fraud in the digital era: its non-static nature. Fraudsters have a lot of tools at their disposal — fraudulent chat bots that harvest consumer information, vast “e-commerce websites” full of users’ personal data stolen in various hacks over the last few years, IP address spoofing, malware that is evermore invisible and subtle — the list goes on and on.
And, given the amount of decentralization in black market economies — and the power of bitcoin to make it easy to transact for illegal services — fraudsters can easily procure specialized tools that even as recently as 10 or 15 years ago they would have needed to buy themselves.
“The level of attraction,” said Reitblat, “is that this process can be automated … We have to give fraudsters credit for creativity and skill, not so much on morals.”
The Goal Is To Say Yes
Building fraud prevention around knocking out every sale that looks suspicious is not as great a service to the merchant as it could be, notes Forter, because it runs the very high risk of pouring ice water on perfectly good transactions — and alienating customers who didn’t like being declined, and who won’t be coming back as a result.
Fraud isn’t going away, and it is going to grow. But, sales grow faster — and the goal is to harness that and think about fraud a bit differently.
“We look at every transaction as if it is legitimate and try to prove that is a fraudster,” Reitblat told PYMNTS.
It’s a small change — but powered by real-time decision analytics technology, it is a powerful and innovative one. In 2016, it was good enough to win them the silver medal at Innovation Project for most Innovative Company (second only to a small firm called Walmart) and $32 million in new funding.
As for what’s next — at Forter, the answer to that question doesn’t change much. What’s next is figuring out what brilliant idea the world’s cybercriminals have come up with now to separate consumers and merchants from their money — and finding a way to say “no” to them without bothering all the perfectly good commerce already in progress.