Online Fraud Prevention

Fight Online Fraud, Together: the Power of Shared Intelligence

October 19, 2018

There’s an impression that if you’re using a service that features “networked” data, you are benefiting from the signals. Dig a little deeper, and you’ll find these networks still exist in a silo, offering no way to leverage risk signals or velocity.

But when selecting a fraud solution to help you meet rising fraud threats, these elements are very important. Are they truly taking benefit of the network? Do they know how to use the variables so it doesn’t pollute everybody?

It’s not just having the data — it’s knowing how to use it. To fight emerging fraud threats, we must look beyond the transactional level. Instead, focus should be on detecting fraud trends, having the full holistic view. Using networked data is one way to do so.

But not all networks are equal. It’s important to differentiate between siloed networks and those which rely on crowdsourced data.

Siloed networks

A data silo is a repository of fixed data that is closed to outside access, much like grain in a farm silo is closed off from outside elements.

The same is true with some networked platforms. Network functionality is used for rule building, rather than gaining intelligence and insights into overall fraud trends.

This means vital information will never be shared. There’s no way to track velocity, or compare your internal data with others on the network to see what elements are associated with risk. This leaves a huge flank wide open.

Because here at Emailage, we see that it’s very common for fraudsters to reuse data as they hit new targets. The silo approach to fraud risk management is rapidly becoming insufficient in preventing increasingly sophisticated transaction-based crimes, such as loan stacking.

Crowdsourced (or Consortium) networks

If you’re looking to put a dent in online fraud, operating in a siloed network will only get you halfway there. Fraudsters rarely only focus on one merchant, industry or vertical. By capturing a broader view of activity, you can gain a more holistic understanding of a transaction’s risk profile.

Consortium networks allow organizations to track velocity. Tracking velocity for fraud prevention is the process of identifying suspicious behavior based on the speed and number of associated transactions attempted in a short amount of time.

Case-in-point: velocity tracking

In our world, velocity is all about how fast a single email is being used in multiple transactions. In this case, it’s loan applications. With velocity tracking, you can identify risky queries in real time and stop anyone attempting to apply for a large amount of transactions.

Say someone is mass applying for loans using the same stolen (or synthetic) identity. Each query of that email address is recorded. An email address queried frequently over a short timeframe will trigger velocity alerts, which warn customers about fraud patterns as they develop.

This process doesn’t only apply to applications at your company. It encompasses all transactions that are happening across our entire network, facilitating enhanced early fraud detection and prevention.

Networked data also offers visibility into how fraudsters are trying to overcome fraud controls and establishes a critical feedback loop between peers and similar companies. Fraudsters have no regard for industry or region. The only way to stop them is with the power of a combined network.

The power of shared intelligence

There are a lot of benefits in knowing what your peers are facing. Intelligence around fraud events allows you to identify risky behaviors faster.

Then, you can react before they become a problem. There’s a flip side, too: the same process works with legitimate customers. When you can identify positive behaviors, you can approve those customers more quickly.

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