There is an easy way to stop all fraud, stop trading! This is undoubtedly a flippant remark but it gets to the heart of the problem many organisations are facing.
At the core of every business is customer growth and retention. Businesses want to welcome as many new customers as possible and provide those customers with products and services. As a part of this, they need to mitigate fraud risk, but controls should be seamless and not impede the customer journey into the organisation. If the solutions deployed to detect and manage fraud are not accurate and efficient, this can lead to too many cases where potential fraud is identified where it simply doesn’t exist. It subsequently impacts genuine customers and runs the risk of losing them. Balancing the need to root out fraud with the need to serve valuable customers is tricky and the identification of too many false positives may be resource intensive, impacting business growth.
1. Managing resources
The more cases of possible fraud you identify the more resource you will need to spend managing and investigating. Fraud investigation takes time and expertise. Not all potential fraud looks the same. Knowledge and time will be needed to categorise risk and apply a process to each category. Prioritising the cases will also be a challenge – do you prioritise those cases that look most like fraud first, or do you prioritise those that look least like fraud, so that you can find the genuine customers among them and process them as quickly as possible?
2. Upsetting good customers
When you are not sure if an applicant is a fraudster you may want to employ extra checks so that you can make a more informed decision. Genuine customers may be put off by demands for extra information or by the extra time it takes for them to receive the products or services they want. In some case this could push customers to go elsewhere for either their current needs or with their future business.
3. Turning away good business
You may make the decision not to investigate possible fraud and simply not to accept business from any customers where the potential for fraud has been identified. While this is a safe bet in terms of avoiding fraud it can also mean the loss of good customers and profitable business. The effects of turning this business away can create long-term problems as those who have been turned away in the past are less likely to want to do business with you in the future.
The stakes are high and the best way to avoid these problems is to employ a suite of fraud protection solutions that work together to identify only genuine fraud. While it is next to impossible to prevent all false positives when selecting solutions to fight fraud, it is vital to not only consider how much fraud is detected correctly, but also how little false positives are returned.
To find out more about Experian’s identity checking and fraud prevention solutions click here.