Real-time fraud prevention is challenging for companies because of several primary factors. Firstly, fraudsters are constantly evolving in their tactics and developing new workarounds for existing anti-fraud protections. This constant adaptation means that companies are constantly racing to detect and respond to new types of fraud before they cause damage.
Scale is another challenge related to fraud prevention. A company that processes a high volume of transactions daily has avery short window to review them for risk. This time frame makes fraud prevention harder and puts more pressue on manual review team. One answer to this challenge is to ensure that an automated fraud detection system is in-place to reduce reliance on manual review.
Any fraud detection system, whether manual or automatic, has to balance security with business goals. Said differently, the system has to be robust enough to detect fraud without being so intrusive that it interferers with good customer acquisition or damages the user experience. Reliabiliy or the false positive rate is also a significant concern: it’s easy to imagine the frustration of a legitimate customer with a legitimate transaction blocked. Old fraud prevention tech also presents a legacy integration problem when upgrading to newer, real-time fraud detection tools.
Finally, like regulators, today’s users are very aware of data privacy. If a fraud detection solution uses PII to perform a risk assessment, consumers and regulators will want to know how that PII is collected, used, and safeguarded.
Despite these challenges, companies should continue investing in real-time fraud prevention as it is critical to protecting their customers and business.