Online Fraud Prevention Accelerating Digital Adoption and Addressing New Challenges


The COVID-19 pandemic has accelerated the shift to digital and multichannel client service, leading to a decade’s worth of digital adoption in just a few days. This rapid transition to digital has also resulted in an increase in fraudulent activities, highlighting the need for effective fraud management. While many organisations have improved their digital user interfaces, enhancing fraud controls without compromising the client experience remains a challenge.

The Impact of Increased Digital Adoption

The pandemic has witnessed a significant boost in e-commerce, estimated to exceed $200 billion in 2020 and 2021. However, this increase in digital adoption has also enabled new forms of fraudulent activity. The sophistication of fraud threat vectors has increased, with nation-state actors, organised criminals, cyberterrorists, and insiders exploiting advances in technology. Common methods used by fraudsters include phishing, malware attacks, social engineering, deep fakes, and fraud-as-a-service exploit kits.

The Challenges Faced by Companies

Companies are often overwhelmed by the sheer volume of fraud attempts, leading to difficulties in meeting online origination targets and verifying identities. The risk of fraud is further amplified by the rise of real-time disbursements and the emergence of cryptocurrency as a new threat vector. Unwitting customers who share their authentication details with fraudsters also contribute to the increased risk of fraud.

The Need for a New Approach to Fraud and Client Experience

A reactive approach to combating fraud, focused on stopping individual schemes through manual reviews, is no longer effective. In order to address the evolving fraud landscape, companies must strengthen their core capabilities and continually identify vulnerabilities arising from new fraud methods and patterns. This requires a new approach that balances fraud control and customer experience.

The Value at Stake

The increase in fraud has resulted in higher costs for companies, including fraud losses and operational expenses related to combating fraud. Fraud losses in the United States alone rose to $5.9 billion in 2021, with Internet crime losses reaching $6.9 billion. Fraudulent activities have also impacted customer trust and willingness to use services. Approximately 10% of credit and debit card users experienced fraud in a 12-month period, leading to increased stress levels and dissatisfaction amongst customers.

The New Approach: Fast, Balanced, and Collaborative

To strike a balance between fraud control and customer experience, companies need to consider authentication, fraud management, and customer experience simultaneously. This requires a redesign of customer and internal operations based on a continuous assessment of actual fraud cases. Organisations often fail to optimise their processes and operating models due to a lack of understanding of trade-offs and a lack of collaboration between different departments. To implement the new approach effectively, companies need to take actions across the fraud value chain, from deterrence and prevention to detection, investigation, and dispute handling.

Fraud Strategy

Companies need to develop an end-to-end fraud strategy that is optimised across the full ecosystem. This strategy should reflect a company’s client, channel, and product strategies, balance fraud reduction, customer protection, operating cost, and business value, and be integrated with enterprise strategic priorities.


Leading organisations generate buzz around their fraud capabilities to deter bad actors before they attempt to commit fraud. This can be achieved through effective marketing of tracking and monitoring capabilities or by marketing strong fraud protection to potential clients.

Risk Assessment

Constantly monitoring emerging threats and assessing their potential impact is crucial for effective fraud management. This involves monitoring controls used to mitigate risks and using the insights to assess vulnerabilities and improve controls.

Controls and Usage Strategy

Having durable, flexible, and adaptive controls is critical to any fraud management program. Detection platforms that incorporate broad and detailed information can identify existing and emerging fraud attacks. Artificial intelligence and machine learning technologies support these approaches and help reduce false positives and missed fraudulent transactions.

Awareness and Education

Promoting consumer awareness and education about fraud and cyber threats is essential. This can be done through viral channels, social media, and partnerships with software vendors to provide customers with prevention tools. Device-based customer alerts and transaction analysis can also help educate customers and empower them to monitor potential suspicious activity.


Robust customer onboarding and authentication processes are increasingly important. Companies should design their fraud technology stack to allow iterative testing across various types of fraud checks. This can help balance fraud control friction and customer experience.


Leading organisations use machine learning algorithms and utilise all available data to achieve more accurate fraud detection. They strive to reduce false positives and the risk of missing fraudulent transactions. Usage pattern profiles and customer information can help detect previously unseen types of fraud attacks.


Supporting investigation agents with sophisticated tools and artificial intelligence can improve the efficiency of fraud investigations. Collaboration between companies and industry partnerships can also aid in detecting and preventing fraud.

Dispute Handling

Providing self-service options for customers to file disputes or check the status of a dispute can improve the customer experience. Automating the dispute handling process can also reduce costs and improve efficiency.

Client Experience and Delivery

Delivering positive customer experiences is crucial for both false positives and true fraud cases. Companies should aim to avoid impeding customer transactions while minimising the hassle and embarrassment of a decline. Good communication and transparency can help reassure customers and build trust.

Shifting to a Proactive, Customer-Centric Approach

Fighting fraud should be a top priority for CEOs across all industries. Organisations need to shift from reactive and siloed fraud mitigation to a proactive, customer-centric, and integrated approach. This requires leveraging AI/ML technologies, actionable analytics, and technology-driven customer experiences. By implementing a new approach to fraud prevention, companies can effectively combat the increasing threat of online fraud while delivering outstanding customer experiences.

In conclusion, the COVID-19 pandemic has accelerated the shift to digital, leading to increased online fraud activities. Organisations need to prioritise fraud prevention and adopt a proactive, customer-centric approach to address the evolving fraud landscape. By balancing fraud control and customer experience, companies can effectively combat online fraud while building customer trust and loyalty.

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