For businesses, fraud has become an existential threat. Annually, fraud costs businesses approximately $5.13 trillion, a figure that has grown more than 50% in the past decade. With cybercriminals using increasingly sophisticated techniques, this figure is expected to grow, with no organization immune to the havoc such attacks can wreak.
As well as costing your business in lost revenue, fraud can cause catastrophic damage to your brand reputation, with incidents often taking weeks or months to resolve, and put your organisation at risk of a hefty legal fine. Taking preventative steps is vital. Deploying an effective, AI-powered fraud protection solution is your best line of defense to keep your enterprise safe from both existing and emerging threats.
What are AI Fraud Protection Solutions?
AI fraud protection solutions comprise software that prevents, detects, and mitigates a range of fraudulent activities, such as account takeovers, identity theft, and payment fraud. These services incorporate machine learning and artificial intelligence to stay ahead of scammers, with the software continuously adapting to protect against new forms of attacks and detecting user behavior that could be fraudulent.
Fraud protection services that deploy AI are vital in services including e-commerce, finance, logistics, travel, and more, where digital transactions are at the heart of an organization’s operations.
Types of Fraud You Need Protection From
There are many different types of fraud that can affect businesses, each of which comes with its own unique risks and challenges in terms of potential damage and mitigation. To choose the best type of protection for your business’s needs, it’s vital to understand the difference between the various types.
Credit Card Fraud
This very common type of fraud involves the unauthorized use of credit card details for withdrawals or purchases. Frequently used techniques include phishing scams, skimming devices, and data breaches.
Identify Theft
Identity theft is when unauthorized individuals use personal information for attacks like new account fraud and account takeover. New account fraud involves the use of stolen identities to first open and then exploit new accounts, whereas in an account takeover attack, fraudsters access a user’s legitimate account to make fraudulent transactions.
Online Shopping Fraud
With online shopping fraud, scammers trick consumers into purchasing on fake websites or revealing their personal information. Common methods include social media impersonation and phishing emails, designed to lure users to fake websites to buy counterfeit products, or products that never arrive at all.
Investment Fraud
Investment fraud involves nefarious practices such as pump-and-dump scams and Ponzi schemes, used to mislead investors with deceptive promises of high returns. Clever marketing tactics are often deployed to trick new investors or those with limited experience.
Synthetic Identity Fraud
A type of fraud that’s markedly on the increase in recent years, synthetic identity fraud is where new identities are created by combining fake and real details. For example, a fake name and date of birth could be used alongside a real photograph. Complex to detect, synthetic identity fraud is a particular challenge for businesses right now.
Dating and Romance Scams
Also on the rise, dating and romance scams involve fraudsters creating fake profiles on social media sites and dating apps, often using fabricated personal stories and stolen photos to gain the trust of their victims. Once a connection has been established, the scammers usually ask for money, pretending they have a medical emergency or need the funds for travel.
Why Do You Need an AI-Powered Fraud Protection Solution?
All businesses need powerful fraud protection services in place to protect customer records, prevent significant financial losses, and comply with data privacy regulations such as CCPA and GDPR. By detecting fraud and stopping it in its tracks before scammers get a foothold, such services help secure your business’s revenue, and are especially important in sectors like e-commerce. In these fields, particularly, costly chargebacks can be the result of not deploying real-time fraud protection.
By safeguarding your customers’ sensitive information, including their login credentials and credit card details, you’ll also strengthen trust in your brand - not to mention avoid any regulatory issues. Further, implementing effective fraud protection measures reduces a business’s operational costs associated with incident resolution and customer reimbursement, ultimately meaning fewer customer disputes. Businesses that prioritize fraud protection show they’re committed to proper data governance, giving them a competitive edge in their fostering of long-term customer relationships.
Key Features to Look for in Fraud Protection Services That Use AI
- Real-time detection is vital to spot and stop fraud before it causes damage. AI solutions use advanced algorithms to instantly monitor transactions to flag suspicious activities, minimize impact, and prevent escalation.
- Dynamic risk-scoring assesses transaction risk based on factors such as amount and location. Transactions deemed higher risk are flagged for review, enabling businesses to address the most significant threats first and optimize their risk assessment processes.
- Behavioral biometrics analyzes user behavior, including mouse movements and typing speed, to detect anomalies. This technique spots fraud even when legitimate log-in credentials are used, as behavioral patterns are extremely tricky for scammers to mimic.
- Comprehensive user activity monitoring checks all website interactions, including logins and transactions. Such an overarching view is important in identifying unusual behavior patterns that may indicate fraud, like logins made at an unusual time or from an unusual location.
- Adaptive authentication processes adjust security measures based on transaction risk. While a low-risk transaction may only require a password, a higher-risk transaction could require multi-factor authentication.
Top 5 Fraud Protection Solutions that Use AI
1. DataDome
DataDome offers AI-powered, multi-layered protection from a comprehensive range of fraud types, blocking malicious intent in real time. This solution deploys thousands of AI models, spanning all industries and companies, and boasts a response time of under two minutes. Best of all, DataDome’s exceptionally low false-positive rate means you get first-class fraud defense without your users’ experience being negatively affected.
Best for: Enterprise-level businesses requiring consistent, reliable protection from a wide range of fraud types.
2. Forter
This solution has been designed to help businesses secure their accounts, fight fraud in real-time, win more disputes, and boost conversion rates. Forter analyzes network intelligence, device data, and user behavior across its global network to keep your business safe from even newly emerging threats.
Best for: E-commerce businesses looking for automated dispute resolution.
3. Riskified
Riskified uses machine learning and AI processes to stop online fraud in its tracks, analyzing hundreds of data points per transaction. The software leverages cross-merchant insights and advanced behavioral analytics to minimize fraud and boost approval rates, and also provides highly actionable customer behavior and sales data.
Best for: Businesses and platforms seeking a scalable fraud protection solution.
4. Memcyco
Offering control over digital impersonation fraud and real-time visibility, Memcyco alerts businesses if their website is cloned, enabling an immediate response. The platform also provides a comprehensive range of behavioral analytics, allowing for better tracking of fraudsters’ devices and affected customers.
Best for: Businesses requiring protection from website impersonation and similar fraud.
5. Kount
Kount uses its vast data network and machine learning capabilities to deliver real-time fraud protection across the entire transaction journey. Billions of interactions are analyzed to build trust and assess fraud risk, and defend against, for example, bot attacks and account takeover attempts. Meanwhile, adaptive AI streamlines the manual review process and reduces false positives.
Best for: Organizations of all sizes that require a customizable solution.
It’s Vital to Keep Your Business - and Customers - Safe from Online Fraud in 2025
Any business keen to protect its revenue, stay on the right side of data privacy regulations, and keep its customers’ sensitive information safe needs a reliable, high-quality fraud protection service that deploys powerful AI for ultimate efficacy. With best-in-class, real-time fraud detection and mitigation techniques, the options above are all worth considering to give you the digital defenses you need in 2025 and beyond.
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