Many emerging tech companies and startups that outgrow their competition are rewarded with a lot of publicity and attention. While publicity remains the best reward for market growth, it comes with some less wanted attention from fraudsters. And these fraudsters can bring a ton of headaches to your business.
How Online Businesses become Targets
Building organic traffic and paid ads are some of the key marketing strategies business owners use to boost their visibility and earn as many paying customers as possible. As visibility grows, so will a website’s publicity, number of links, mentions, and shares on social media. This, in turn, boosts the visibility of a business exponentially from an SEO perspective bringing in more customers, partners, and online traffic.
And while this sounds like a golden ticket for all business owners and entrepreneurs, it could bring some unwanted attention too. There are a large number of eCommerce stores, gaming sites, gambling platforms, and travel agencies that fall victim and even become bankrupt due to a swarm of malware hackers and fraudsters. Running a successful business and maintaining its security online is one of the fastest-growing issues for all emerging companies worldwide.
In North America alone, 23.4% of scams had to do with the purchase of digital assets. Buying things like fiat currencies or virtual goods and services have a higher chance of being scammed than anywhere else. That is why the right fraud and scam prevention methods have to be introduced.
The Challenges of Online Fraud Prevention
One of the biggest challenges online businesses have to face is to detect and filter out certain attributes of browser behaviors that would mark someone as a fraudster. But how can anyone detect this?
Assuming that third-party fraud prevention tools or agencies are out of the picture, one needs to take matters into their own hands. And that is where difficulties can begin. A business owner has to look into several Know-Your-Customer measures (more commonly known as the KYC process) to decide who has legitimate intentions and who does not.
How Fraudsters can take advantage of your Business
Let’s take an example to simplify the matter. Let’s assume you’re running a software company that offers a specific online service. To expand your company and get as many referrals as possible, you have your own affiliate program that rewards affiliates with a certain commission for each sale or by simply displaying your affiliate link on their site. The idea itself is great for link retention and site growth. But what about affiliate fraudsters who want to abuse your program?
Once a fraudster signs up to become your affiliate, their first aim is to bring in legitimate traffic to the site. Sounds legitimate so far, however, the way they do it is not. The fraudster creates fake landing pages that look like legitimate ones. Users who end up on these fake pages are redirected toward your software site. If some of them sign up, that’s a plus for the fraudsters.
To ensure they get their commission or share of reward, fraudsters rely on multi-accounting. They will source stolen IDs from data breaches purchased on the darknet. By using bots, they can automate the process and scale it to their liking.
This is just one of the many ways fraudsters can take advantage of your online business. There are more common and dangerous ways, like account takeovers, email phishing, or reverse chargebacks.
How Online Businesses can create Fraud Prevention Solutions
It all comes down to the same fundamental rules.
If you want to prevent scammers, fraudsters, and mischievous individuals from infiltrating your business, you need to filter them out. This is easier said than done because one needs to be cautious about limiting fraudster activities without scaring away potential clients.
While there is no ultimate solution to flag or detect every malevolent browser coming to your website or signing up for your business, there are multiple ways to make their life difficult. As mentioned earlier, having implemented the right KYC measures you can eradicate suspicious users and unverified accounts to speed up user verification. This is where a fraud detection tool comes in handy.
It’s all about letting users input the strict minimum to comply with KYC procedures. Your fraud detection tool can do the rest of the work in the background, by looking at the user’s digital footprint through:
- Device Fingerprinting: this term is meant to help you gather valuable information about high-risk users based on the combination of software and hardware they use to connect to your site. What’s most important is to see and know where your users come from and how they interact with your business. Device fingerprinting is something that makes this possible
- Data enrichment: if a client or applicant signs up, use their email address or phone number and look into it. For instance, an address found on a data breach is actually a high indicator that it is valid and genuine.
- Social media lookup: it is probably obvious that having valid and active social media accounts is reassuring and a sign of a non-fraudulent individual. SEON has a risk assessment tool that has found that 76% of defaulting clients who had borrowed a loan didn’t have any social media accounts linked to their email addresses. Having no social media presence at all in the second decade of the 21st century should be looked at with suspicion.
As your business grows, so will its publicity. While this is great for your online business, it will eventually result in attracting some fraudsters and scammers who will want to take advantage of your business.
To mitigate this process, one needs to implement the right fraud prevention tools to make fraudsters’ lives difficult. The idea with the KYC process is to move towards an experience that is as frictionless as possible, using social media, ids, or face scans. Having these implemented into your business can help many online businesses weed out unwanted users and ensure their continued growth.