What is fraud prevention?
by Rory Traynor
As we have seen in our previous articles in this series on fraud in the UK, criminals are using a vast array of schemes and techniques to steal billions from businesses, consumers, and the government. So much so that being targeted by fraudsters in a near certainty in many sectors.
It is a sad truth that this rank criminality is going effectively unchecked, with police forces unwilling or woefully unequipped to investigate this type of crime, let alone enforce it. This means that businesses are forced to take responsibility for their own protection.
Collectively the processes and tools implemented to do this are called fraud prevention.
What is fraud prevention?
Fraud prevention refers to policies, functions, and processes that prevent fraud. No fraud prevention strategy is perfect, but companies can focus on preventing the types of fraud that pose the most risk to them.
Whilst fraud prevention is nothing new, it has become a much more important business function and is more widely implemented than it used to be. Not only this but companies are dedicating significantly more resources and budget to it.
Whereas fraud prevention used to rely on primarily manual processes, companies are now able to deploy highly advanced, quicker, and much more accurate digital technologies to defend themselves from the actions of those seeking to defraud them.
These new technologies are affording businesses the ability to construct much more thorough and effective defences against financial crime by introducing steps to their processes that eliminate human error. This is significant as fraudsters are professionals at deceiving people and are often experts in the common processes and ways of operating of the types of businesses they seek to exploit.
So much so that 90% of all frauds rely on their being a person to deceive.
This does not mean that humans should be removed from every aspect of your fraud defences, there is still little substitute for a staff member who is well trained and experienced in detecting fraud, but rather that you should construct tech driven processes and fraud checks that provide your staff with the insights that they would otherwise be unable to obtain.
As these digital idv checks are much more accurate than a human, and much more difficult to fool, the best fraud prevention processes center their decision making on the results of these checks and only allow failed checks to be overruled after the case has passed through a multi-layer review process. This is because statistically the technology will be correct over the person.
Having robust fraud prevention processes in place doesn’t just protect you in the sense that your checks will flag those seeking to defraud you. They also serve as a powerful deterrent and, in all likelihood, most fraudster will not continue through the process once confronted with a digital check, especially an IDV check that requires them to take a picture of their face and ID.
As fraud rates continue to rise it is likely that almost all companies will either introduce or firm up their fraud prevention processes. Join us next time when we look at the methods that you can introduce to make your company fraud safe.
