A massive spike in fraud of all kinds has taken businesses by surprise and left them scrambling for solutions, Trulioo Chief Operating Officer Zac Cohen told Karen Webster in a recent conversation. It’s a testament to how fast the ground has moved beneath them, he said.
It’s not that these entities didn’t have protection in place and weren’t thinking about the issue pre-COVID. But Cohen said the incredibly fast pivot they’ve had to make from being partially digital to nearly entirely digital left an awful lot of firms floating in uncharted waters. Unfortunately, those firms are finding that they’re surrounded by fraud sharks eager to take a bite out of their business.
“Most organizations expect a level of fraud, but the numbers are driving so dramatically higher that it’s not the same old story anymore,” Cohen noted.
Instead, reports indicate that fraud is up more than 50 percent year on year, fraudulent account openings have risen 33 percent since the pandemic began and synthetic fraudsters are generating 10 percent to 15 percent of annual fraud losses.
Unfortunately, Cohen said the same old fraud-fighting solutions aren’t going to work in today’s world. If anything, he thinks fraud attempts are likely to go up aggressively as commerce continues its digital surge.
Worse, fighting the problem won’t be as simple as all businesses adopting a single strategy. “I believe that every organization is unique, so the combination of two [fraud-fighting] elements that your neighbor or perhaps a competitor in another vertical are using may not be what’s best for you,” Cohen said.
Still, he said there are best practices and better ways to restructure for a fraud-rich environment that will protect customers without drowning them in frictions that will make them want to bail out of the experience entirely.
Leveraging The Power Of Layers
A simple starting point is understanding that fraud is complex and that there’s no single indicator to tell firms that it’s happening. For many organizations Trulioo works with, Cohen said, it’s hard to accept that reality, but it’s something that everyone must acknowledge.
He recommends a layered approach using all kinds of identity signals — biometrics, device data, user information, etc. Cohen said the best protection will come from the interplay between all of those layers, possibly custom-tailored to each specific interaction.
Fortunately, consumers are generally smart and reasonable people who will tolerate small frictions if they verify that someone is who they claim to be. But Cohen said those processes can’t be onerous time-drags, and consumers must understand the purpose of the verification.
He said consumers will get impatient and abandon a transaction when they try to make a simple, relatively low-priced purchase and find themselves mired in a 25-step process that seems like a lot of incomprehensible security overkill.
“This is what I mean when I say the same process doesn’t work in every single scenario,” Cohen explained. “Every organization has a certain demographic they need to specifically serve. That is the beauty of network availability that uses a layered approach because you can modularly choose which elements need to be in the specific customer journey.”
However, he said the alternative is to risk losing one’s customers in an attempt to protect them from fraud.
The Power Of Getting It Right
While there’s no single fraud solution for all businesses, Cohen said it’s not necessarily bad that many companies suddenly find themselves fighting an increasing volume of fraud attempts. He believes that with some forethought, any company can build an effective fraud-fighting process.
“While it is certainly true that all of these tools and technologies aren’t perfect for everyone, there is an ideal combination for anyone who wants to protect themselves and decrease the fraud that’s attempting to penetrate their own ecosystem,” Cohen said.
Trulioo has seen tremendous advances in the use of biometrics, mobile phone data, metadata and artificial intelligence (AI) to comb through terabytes of information, spot patterns and undercut fraud attempts. The fraudster might be improving, but so are the tools to fight them, Cohen said.
Two Key Steps
But to really tap into the power of those tools, firms must do two important things, Cohen said.
The first is accepting that whatever companies put in place needs to be as “future-proofed” as possible to remain useful.
The second is to look from the start at what Cohen calls “shifting left.” That means pushing the security or fraud-fighting discussion surrounding a new product or experience to the beginning of the development process rather than the end.
“As you’re building your user experience, as you’re thinking about global domination of your products and services, let’s have that conversation early on and understand what it means to future-proof a solution,” Cohen suggested. “Because from there, everything is possible.”