In my previous blog, I talked about the best time to invest in fraud prevention capabilities. Which, summarized, stated that even if fraud volumes are low, you should still closely evaluate your controls, as fraud is an ever-changing issue.
As part of that blog, I also made a slight comparison about fraud prevention capabilities and the potential of a data breach. Here, I would like to dive a bit deeper into that topic.
We have seen how many breaches have happened to very prestigious brands. The threat has spread across all industries—government agencies, ecommerce, dating websites, to name a few.
Today’s data breaches are a constant threat and most every company is making major investments to keep hackers away.
The role of bad actors: a parallel
Let’s explore fraud and data breaches by comparing it to something you’re likely familiar with: the TSA process.
By today’s standards, the airport security of decades past was minimal. Passengers had to undergo only metal detector screening. At some airports, such as in my hometown, passenger bags weren’t even X-ray screened. Plus, you could bring any drinks aboard that you wanted to.
Nowadays it’s not so easy, because bad actors have compromised that convenience, not just for myself, but for everyone else. There’s a parallel here to the experience of conducting online business.
In the digital world, you can only fly under the radar for so long
As business grows and word begins to spread, or marketing exposure increases, that’s when fraudsters will make their move. From here on out, expect every part of your process to be continuously and thoroughly examined for potential weaknesses and opportunities.
If, and when, weaknesses are found—you can bet word will spread like wildfire on fraudster communities and forums.
How can you maintain a seamless process, one that introduces little to no customer experience friction, while still keeping fraudsters at bay?
In my view, the right approach is to invest in the right fraud prevention capabilities before you scale. Today’s world requires you to be able to surgically identify risky transactions, while still approving the majority of your good volume.
Think of it like this: consider fraud prevention defense is ideal with budget and time. While an attack may free up budget, you’ll be fighting against time to react. On the flip side, too often losses deemed inconsequential can lead to abundance of time, but little in the way of funds. It’s best to plan accordingly.
A real world example
Last week, I had the pleasure to speak with a fellow fraud prevention professional. We’d previously talked about a year ago. His company was seeing fraud prevention losses amounting to only a few thousand dollars each month. With losses deemed insignificant, they felt it wasn’t the time to invest.
Since our last conversation, the company’s fraud losses have grown 20 times over. As the company’s profile has grown, so has attention from fraudsters.They are attempting to keep fraudsters away—with transactions at an all time high—while also trying to repair existing openings in their systems.
When fraudsters find a way in, you’ll quickly be involved in a two-front war. It’s a race against time in denying fraudulent transactions, while ensuring good customers are approved. That’s not to mention the quick ramp up of money and resources needed to fight back.
Sadly, cases like this are a constant as I engage with customers. It’s why I believe so strongly in investing in fraud prevention technology as soon as possible. That way, you reduce the risk of exposure to fraud attack, enabling you to focus on what’s really important: proactive growth and expansion of your online presence.
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