5 Traits of Companies Successfully Preventing Fraud and How to Apply Them in Your Business
An IDology, Inc. Whitepaper
5 Traits of Companies Successfully Preventing Fraud and How to Apply Them in Your Business
No matter how big your company is or what industry you are in, every business typically has the same goal:
Improve the bottom line. Successful companies reach this goal in several ways including minimizing risk and loss. With $49 billion lost to identity thieves in 20061, it might seem daunting to protect your business from fraud. Yet many companies are doing it and can be recognized by 5 key traits. The good news is every single one of these traits can be cultivated in your business so you can successfully prevent fraud.
So what are they?
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They have a deep understanding of where fraud occurs most. It seems like a simple rule to running a business but you would be surprised at how many companies do not have a good handle on where and how much fraud is occurring in their business. Without this knowledge it is difficult to control losses and defend a business from fraudsters. Companies with low fraud rates are able to identify which distribution channels have higher fraud attempts, what product or service is at a higher risk, and also the common signs of fraud in their business and what type of suspicious activity to monitor. They also know that having too tight of a fraud screen in place costs them lost revenue and so they have learned to balance revenue and customer satisfaction while lowering fraud.
1. Javelin Strategy and Research and the Better Business Bureau, 2007 Identity Fraud Survey Report, February
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Š 2013 IDology, Inc.
5 Traits of Companies Successfully Preventing Fraud and How to Apply Them in Your Business
Action: Complete a fraud assessment of your company. Do you conduct business with consumers not present through a website or a call center? Take the time to evaluate all your distribution channels and assess what products or services are at a high risk for fraud. Try to calculate your fraud rates by channel, product/ service or whatever segment is relevant to your business. Remember there are many types of fraud so you should also look outside of your profit channels to get a clear understanding. For example, is there a possibility that some of your employees are using a stolen social security number or identity? Be sure the employees who have access to sensitive customer data are who they say they are. Be sure the employees who have access to sensitive customer data are who they say they are and that you perform appropropriate background checks when hiring. Before you can control fraud, you need to have a complete picture of the risks in your business including those that are internal.
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They stay up to date with fraud prevention technology. Criminals get trickier every day, from phishing schemes to brute force attacks on vulnerable databases. It is not enough to rely on old technologies to protect your business, nor is it smart to neglect any area that puts you at risk. Staying up to date and deploying the latest technological solutions, both on the frontline and in the back office, are helping keep these companies ahead of the criminals.
Action: Be willing to deploy new technology solutions. Make sure your IT team is familiar with all the ways your current technologies are working as well as understands new solutions available. Advancements in fraud technology are happening every day and you should be testing new applications, especially when your bottom line can significantly improve. If you are concerned with the impact on your IT team you should look for solutions that are easy to deploy and will not be a burden to maintain.
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Š 2013 IDology, Inc.
5 Traits of Companies Successfully Preventing Fraud and How to Apply Them in Your Business
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They operate under the “Know Your Customer” principle. While “Know Your Customer” helps the financial industry comply with the USA Patriot Act, it is not just banks following this concept. To deter fraud, these businesses are taking extra measures to identify people in faceless situations. Remember, relying on credit card verification only verifies that a credit card is active, not that the person using the card is authorized to do so.
Action: Use verification technologies that identify people in “consumer not present” situations. Do some homework and learn about technologies like identity verification and knowledgebased authentication which are designed to verify people not standing in front of you. Having a higher confidence that the person on the other side of the computer screen or telephone line is real helps protect both consumers and your business from identity theft. Based on the #1 trait listed above, you also know you need to have a good understanding of where and how fraud is occurring in your business but not put too tight a fraud screen in place. The key is flexibility and finding a solution that gives you more insight into an ID so that you can quickly pinpoint suspicious behavior and determine how best to handle the situation.
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They protect consumer privacy. We can barely go a day without a data breach being reported in the news either from a business or a government. The Privacy Rights Clearinghouse reports more than 216 million records in the United States alone have been compromised since 2005. While the direct impact of data breaches to the incidences of identity theft is undetermined, these companies have used common sense to conclude that a higher exposure of personal data means a higher risk of someone misusing the information and are taking steps to protect consumer privacy.
Action: Limit what personal information you require from consumers and update your privacy policy. Is asking for full social security number really necessary to your business? The more information you collect from your customers means the more data you have to secure and store. Limit the data you collect to the bare minimum and be sure to cover how this data is being used in your privacy policy. You should also refer or link to your privacy policy during the transaction to let consumers know that their data is protected.
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© 2013 IDology, Inc.
5 Traits of Companies Successfully Preventing Fraud and How to Apply Them in Your Business
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They adapt easily to change. Having flexibility is critical to success especially in an On-Demand world where we are able to customize and control so many things. The rules and processes working to protect you today may not be the same tomorrow because the fraud landscape quickly changes. Being able to recognize and adapt to change instead of doing things the same old way is what separates successful companies from those realizing large fraud loss.
Action: Adopt an On-Demand mentality for fraud prevention. Whether it is to meet new regulation requirements in your industry or just the demands of your business, being able to customize your fraud prevention rules, processes and settings needs to be a priority in how you manage fraud. Everything – from the fraud prevention solutions you deploy to the mentality of your employees – should be flexible. And most importantly, seek out On-Demand applications that give you more control. Doing so better enables your company to stay ahead of the competitive landscape.
About IDology, Inc. IDology helps companies drive revenue, decrease costs and prevent fraud by providing real-time technology solutions to proof an individual’s identity and age online, in a call center or through a mobile device, without interrupting the transaction. What is unique is we do this in a way that builds more confidence with your customers – by protecting sensitive data and promoting consumer privacy. Using our ExpectID® solutions, businesses have the ability to easily and quickly escalate proofing requirements based on the initial findings of a search by delivering interactive, multiple choice questions derived from independent sources that prove someone is who they claim to be.
IDology is the only provider to offer an on-demand change management tool that allows client business unit managers to manage and control the entire proofing process without having to rely on internal IT resources or contact IDology’s customer service. For more information, visit www.idology.com or call 866-520-1234.
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