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Looking through the eyes of fraudsters. A switch in perspective on fraud management

Wednesday 12 September 2018 | 08:39 AM CET

Aldrin Mangalabal, Acapture: Analysing the behaviour and mindset of fraudsters in correlation with individual business models is a unique ability to fight fraud

Either on a personal or business level, changing perspective is always inspiring and helps us perceive a story from a different angle, opening a new set of dynamics that perhaps we have previously not considered.

In terms of fraud management, the industry is naturally inclined to first evaluate its own strategies and systems and fine-tune them, intending to make them future proof. Assessing our own approach and methodologies to fight fraud are indeed good first steps. The next level, however, involves switching perspective and look at the behaviour and psychology of fraudsters. This offers new insights, helping us detect fraud much faster and empower our fraud systems to adapt quicker.

Fraudster mindset and behaviour

Why are fraudsters always a step ahead? Due to their dynamic, flexible and reactive nature.

They move fast to successfully achieve their goal and they swiftly adapt to the specific targeted business models, adjusting both their approach and technologies on the way. But the most striking characteristic of the fraudster behaviour is their reactivity; by analysing the business models in conjunction with fraud scenarios, we realise that fraudsters just act in response to the type of business they target, taking advantage of its vulnerabilities. Also, depending on how the business evolves, the fraudster behaviour will align accordingly.

In the fast-growing retail space, consumers demand modern, seamless experiences. In their quest to offer the ultimate experience, merchants unconsciously weaken their control processes, which turn the setting into the perfect playground for fraudsters. By assessing the merchant’s checkout flow and delivery of products or services, fraudsters find the weak spots and abuse the systems. And while businesses are implementing strategies to grow and retain their customers, the bad guys are busy posing as genuine customers, taking advantage of company assets.

But how reactive? Looking at the retail market, fraudsters would target items of higher value ranging from consumer electronics to expensive apparel. These items do not have an expiry date and they can easily be resold or used. Turning to a different sector like online travel, the fraudster reaction will change; they will be inclined to make reservations in a shorter timeframe before the trip or hotel stay, between 24-48 hours to either use the services for illegal activity or resell them through innocent customers.

Just as we work constantly on our strategies and techniques, fraudsters develop their approach as well, keeping up with and outsmarting plenty of fraud prevention solutions. For fraud management professionals it’s interesting to follow how the bad guys adjust their approach and instantly react to a sudden change that retailers might introduce.

But how do fraudsters get away with fraud while feeling good about themselves? Although specialists haven’t been able to conclude the precise motivations that the bad guys have, there is certainly greed and dishonesty behind each fraudulent behaviour. And since nobody can handle a persistent guilty consciousness, fraudsters simply take away the feeling of responsibility by finding different excuses for their actions.

Fraudsters are reactive; it’s always the resalable value of the products or services we offer that determines fraudsters’ next step. Thus, it’s very important for merchants to be mindful of how they offer these products and services and anticipate fraudster reaction when changing the online trading strategies.

Keeping up with fraudsters

Skilled fraud analysts know how crucial it is to assess the business model, be familiar with the psychology of fraudsters and keep up with the latest trends in terms of their developing behaviour, beyond data and number crunching. This knowledge contributes to making the technology complete and robust enough to tackle fraud as it continuously evolves in the highly competitive global market.

Analysing the behaviour and mindset of fraudsters in correlation with individual business models is a unique ability to extract the valuable information from numbers and systems, ultimately turning them into proper tools used to identify fraudsters. That’s why regardless of the financial value of the transaction, each fraud attempt has to go through rigorous examination that will help the fraud team get prepared for the next hit. Thus, make sure you provide your in-house team with advanced training to fight fraud so that they have all the essentials to maximise productivity and keep fraudsters away from your business.

Analysing the behaviour and mindset of fraudsters in correlation with individual business models is a unique ability to properly fight fraud.

The ideal solution: best of human and machine intelligence

Now that we’ve established how crucial the psychological perspective is for fraud specialists, we’re set to determine the ideal fraud management solution that can keep away even the most talented bad guys. And the recipe consists of the following two ingredients: the power of machine learning and practical fraud prevention expertise.

Based on vast data analysis, machine learning technology ensures a fast and accurate prediction of fraud, creating less false positives and driving a higher conversion for merchants. This combined with identifying business risks and anticipating potential fraudster moves results in a complete solution qualified to keep up with all fraud types. Acapture’s fraud fighting solution combines the best of human and machine intelligence, supporting merchants increase conversion and be one step ahead in the fraud game.

Recipe for the ideal fraud management solution: state of the art machine learning technology heavily seasoned with hands-on expertise on fraud management, trends and fraudster behaviour.

Want to learn more about how fraudsters particularly react to your business? Book a live demo.

About Aldrin Mangalabal

Aldrin is Acapture’s Fraud Manager, specializing in payment products and revenue optimization. He has been at the forefront of fraud innovation for his entire career, working with corporates, start-ups and SMEs from every corner of business culture to bring products and commercial strategies to new levels of accuracy and effectiveness. Companies for which Aldrin has previously worked include, Starbucks and Hawes & Curtis.

About Acapture

Launched in 2015, Acapture is a new, modern, international payment service provider focused on maximizing the revenues of merchants around the globe. Acapture is affiliated to Payvision, one of the world’s fastest-growing global card acquiring networks. Licensed as a payment institution by the Dutch Central Bank, Acapture combines with Payvision to help merchants grow their business globally. This is done through a complete data-driven omnichannel payment solution, capable of managing a payment at every stage, from checkout to fund collection to settlement.