Top Tips for How to Prevent Fraud as a Service Attacks
If it feels like the bad actors have the upper hand, don’t lose heart. Just because fraud has become professionalized doesn’t mean it’s unstoppable. In fact, the very tools that make Fraud as a Service so scalable can also make it predictable. To fight back, it’s imperative to have the right defenses already in place.
You’ll need to build a multi-layered defense system. Combining advanced machine learning with more traditional manual reviews, you can make your business a less attractive target. Robust verification protocols should also be part of your plan.
In this article, we lay out proactive steps you can take to thwart fraudsters and safeguard your revenue.
Similar to software as a service (SaaS), buyers who purchase Fraud as a Service (FaaS) products don’t need to understand the inner workings of program how to carry out the fraud themselves. That’s a big problem for legitimate merchants and consumers: it means that even the least sophisticated bad actors can launch complex and large-scale attacks with nothing more than an internet connection.
Detecting & Preventing Fraud as a Service
The rapid expansion of organized, for-profit cybercrime is nothing short of a five-alarm fire for eCommerce merchants and other digitally-native businesses.
Luckily, while FaaS attacks can be more scalable than rogue threats perpetrated by ragtag groups of fraudsters, the strategies for deterring FaaS-enabled attacks are basically the same as deterring any fraud attack. Here are just a few ideas that can help:
Give AI Fraudsters a Taste of Their Own Medicine
Machine learning-based anomaly detection tools can help you uncover unusual buyer activity prior to checkout, identify high-risk IP addresses or geographies, and block purchase attempts before they morph into chargeback fraud or refund abuse.
AI tools can also be paired with fraud scoring tools that aid in accurate and quantifiable fraud decisioning.
Verify Every Customer… Every Time
It’s no longer safe to accept automatic payments without redundant verifications, even from regular customers. You just never know whose data has been compromised.
You should integrate customer authentication software with your regular checkout processes, or ask your processor if you can upgrade to a more secure platform. You should also deploy multilayer detection software, with multiple fraud detection tools to verify your customers, including:
Use the Law — It’s On Your Side
FaaS is inherently intertwined with other highly illegal activities, such as drug trafficking, human trafficking, and murders-for-hire. So, authorities have a vested interest in stamping out the threat.
If you suspect you’ve been a victim of a FaaS-enabled attack, you can lodge a complaint with the FBI’s Internet Crime Complaint Center (IC3) or file a report with the US Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA).
Beware of False Declines
According to our internal research, the average merchant can experience false decline rates of 20-30%. The total cost of false declines is projected to reach $443 billion every year. That’s substantially higher than the actual cost of credit card fraud.
We are urging you to ramp up your anti-fraud efforts and verify every one of your customers before purchase. At the same time, a balance must be achieved. Here again, machine learning may offer a potential solution.
We’re talking about a process called dynamic routing. Here, machine-learning technologies can route transactions to the bank in order to clarify details and improve the odds of authorization. It can let you route a cross-border transaction through a processor located in the same country as the buyer, for instance.
Employ Manual Review
There comes a point when a machine is incapable of discerning potentially fraudulent behavior from unusual but valid customer activity. In order to stave off the false declines mentioned above, it might be necessary to designate a fraud manager within your own company to manually review flagged orders before approving or denying them.
This isn’t always easy, though. Fraud management demands specific expertise. There may not be anyone within the organization with the skills and experience necessary to oversee this process.
If you struggle to find a happy balance between false declines and stopping fraudulent transactions, perhaps it’s wise to consider hiring a third-party expert to help you optimize both.
Let the Fraud Experts Help
Fraud as a Service ultimately represents a paradigm shift in the cybercrime landscape. Like fragmented industries that gradually consolidate into multinational giants, scattered threats are coalescing into a highly organized and scalable — and wholly illegal — industry.
The takeaway? Ongoing vigilance and proactive action will be the bare minimum if you want to successfully keep emerging FaaS threats at bay.
But you don’t have to do it alone. At Chargebacks911®, our dual-layered, AI-enabled fraud prevention tools can help you safeguard your hard-earned revenue from
