A lot needs to be done to leverage the expertise of fraud prevention specialists. Be it for the way risk is managed, to being smarter or finding an apt way for such discipline to function, entities can put themselves in a better position to combat fraud, writes Ai’s Ritesh Gupta.
27th May, 2021
Fraud shouldn’t be seen as a standalone function in travel companies, asserted Dennis Köhler, FlixBus, during ATPS Fraud Virtual Conference, held this week.
As quite often is the case, the big picture regarding fraud isn’t visible to the management. Organizations need to re-think their approach and re-consider how the anti-fraud department can make the most of their available resources. A well-balanced approach, one that encompasses an apt blend of a proficient anti-fraud team and data/ tools expertise, is must to protect travel e-commerce businesses against fraudulent transactions, account takeovers (ATOs) etc.
E-commerce entities and the fraud prevention team must look into several aspects to ensure the discipline is prepared to show its prowess:
- Going beyond back-office reconciliation: Airlines need to start thinking of their fraud and payment flow as part of their revenue optimization initiative and not as a back-office reconciliation function, Stuart Barwood, Director Global Airline Strategy at Forter told Ai’s Ritesh Gupta in a recent interview. Barwood mentioned that the current approach of having “revenue generation” report to commercial and “revenue loss prevention” report to finance creates a situation where no one function has control over both sides of the conversion metric.
Köehler referred to the significance of a more cohesive effort encompassing various departments for better planning, for e.g. for payment options, preparing for SCA etc.
- Managing risk: Every transaction counts and a risk-averse mindset – i. e. rejecting a transaction than to risk passing a fraudulent one – won’t work. A major lesson from the Covid19 pandemic when comes to balancing UX and security is to make the most of available data. “Every transaction counts and fraud rules can’t be too tight,” Microsoft’s Sandra (Sondra) Feinberg pointed out. How to pave way for more revenue, based on a bigger risk appetite? Isn’t there much bigger loss in revenue when a merchant simply declines transactions, rather than risking clearing a fraudulent one and learning from it? How to manage false positives better?
- Being smarter: Sondra, during the ATPS Fraud Virtual Conference, said it is important for airlines to pivot. “Don’t settle for good enough – take a look at machine learning, adaptive AI…become smarter,” she said, referring to the significance of a chargeback signal (i. e. a signal from AI tech – counting on constant feedback and understand what has transpired or resulted in a chargeback)”. And an ongoing effort must be made to learn what fraudsters or scammers are up to.
For instance, as Karisse Hendrick pointed out this week, “peeking” is when fraudsters look into an account, but just do the same to check the status. It is quite intriguing and (of course, dreadful for anyone trying to prevent ATO or any sort of fraud) to assess how fraudsters eventually get hold of personal data and sell it on the dark web.
It is important to keep a vigil on fraudsters. SecuredTouch‘s Lewis Duker and dLocal‘s Carlos Palma highlighted that the level of fraudulent activity has risen.
Karisse added that the issue of account takeover (ATO) is a huge issue now. Referring to how fraud landscape has evolved in the last year and half or so, she said carding is harder (improved fraud detection for carding makes ATOs more attractive). The issue of passwords not being distinctive (with more than 80% of users opting for same password for multiple accounts) remains a big problem. Karisse also pointed out that collaboration and coordination is “easier than ever for fraudsters”.
- Count on the human element: While the use of machine learning and AI is what is being keenly followed, don’t overlook the importance of the human element, too. “Diversity (while recruiting people), specialized knowledge/ skills, and training and support (is key to curbing fraud),” Tina Burgess, Director of Risk and ePayments, Points during an Ai conference in late 2019.
All of this will only enable an entity to serve their customers better and at the same time trust isn’t broken (with fraudulent activity) or CX turns out to be sublime (less rigid security measures for friction-less shopping).
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