Creative freedom in fraud investigations

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The most sophisticated criminals proactively change how they operate. They also getting cleverer about using more covert techniques to obtain data. This means that fraud fighters also need to be increasingly resourceful simply to keep up. What if fraud detection and prevention systems could give fraud fighters the same creative freedom as fraudsters?

“Impossible!” you say.

Fraudsters do not have to ask for budget, wait for approvals, or work with the challenge of data silos. They cooperate in organized groups and exchange “recipes” on the dark web on how to attack specific companies with the highest likelihood of success. As highlighted in the latest Internet Organized Crime Threat Assessment (IOCTA) 2020, victim reconnaissance plays a significant role in attack preparation. This is valid in both the online and offline worlds. So, what can organizations, and their fraud fighters do about this?

“Data! Get the right insight from data!”

There is no shortage of data available for investigations. The challenge is to select the right data that helps identify fraud networks, problematic clients or fraudulent transactions without generating too many false positives that delay customer transactions and keep investigators from working on the “right” alerts. The ideal situation is to alert only on “real” fraud—but that is very difficult to achieve, as the fraud patterns are ever-evolving, and any hybrid analytical detection models need regular revisiting.

Balancing fraud detection and customer experience

False positives naturally impact customer experience. They slow down processes such as applying for bank accounts or loans, or even online shopping, and make it harder for customers to get decisions quickly. This inevitably affects customer satisfaction, net promoter score (NPS) and the customer’s willingness to do business with the organization. However, organizations must balance the customer experience against the need to keep costs down by preventing as much fraud as possible.

Can you trust the system?

It should be obvious, but not everyone considers that the usefulness of fraud detection systems rests on the quality of alerts / red flags it produces. The quality, in turn, depends on the analytical models generating the alerts, and the quality of the data being fed in. The best systems will allow investigators to provide feedback and information to help improve the quality of the model and alerts. There is a strong positive feedback loop associated with high quality alerts. As the quality improves, so does investigators’ trust in the system. Investigators are therefore more likely to use and rely on the system. In doing so, they will also provide more feedback to train the system, improving its quality further. This positive feedback loop can even result in exponential improvement of systems.

The holy grail of creative freedom

To enable the fraud detection teams to truly impact the fraud detection systems by providing the continuous feedback on alerting with trust in its operational efficiency, it is incredibly important to take the next step in unlocking the creative freedom in investigations to the greatest and safest possible extent. The two areas below should form a solid baseline for unleashing that freedom:

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The design of the investigative workspace will hugely affect a fraud team’s ability to operate. The environment needs to provide access to all the necessary data. It must be simple, intuitive and enable users to consolidate and configure data as they need. It also needs to be easy to use.	The real potential of analytics, including visual analytics, is to do the “heavy lifting” in fraud prevention. Investigators need to be able to have timely and accurate access to all data necessary and to have exploratory tools at hand to uncover hidden connections with minimal effort.

This baseline can allow time to focus on the creative thought process leading to new ways of thinking, working, and stopping fraud in its tracks. If taken reversely, isn’t that what fraudsters are doing all the time?

Advanced analytical tools (such as network/link analysis) can no longer be a privilege of the few but must become a norm in efficient fraud deterrence systems, thus enabling fraud prevention teams’ contribution to company’s profitability through effective loss prevention and risk mitigation. By unleashing the creative freedom in fraud investigations, organizations can effectively and proactively support their fraud fighters in making the right investigative decisions. leading to improved protection of company’s bottom line and reputation.