Online Fraud Prevention : 6 Steps That Businesses Can Adopt

6 Steps of Online Fraud Prevention for Businesses

With the rapid development in the online retail industry and banking industry, there is an increase in the fraudulent activities accordingly. New and emerging technologies are on one side serving the businesses in multiple ways, but on the other side, they are giving them a tough time. Fraudsters find loopholes and vulnerabilities in the system and exploitation allows them to perform malicious activities. These activities result in heavy fines and risks.
A huge amount is spent on online stores. According to a study, global e-retail sales amounted $1.9 trillion in 2016 which is estimated to rise to $4.06 trillion in 2020. Fraudsters have endless opportunities in the face of online stores and businesses. The businesses failed to comply with the security measures are prone to the cost of loss. Every $1 of the fraudster orders cost an additional of $2.62 to online stores and $3.34 in case of transaction done through mobile phones. The countries which issue cards are 2-3 times more affected by online fraud than the ones who do not. Credit card fraud is the most common. Fraudsters use fake credit card information and perform online transactions which at the end costs the online business.
How can online businesses prevent themselves? What steps should be taken into consideration? The techniques of fraudsters are getting advance. Therefore, the pace of online businesses to introduce betterment in the system should also increase. For any business, it is important to take serious steps in order to prevent themselves from online payment scams and credit card fraud.
Following are 6 steps that can ensure safety in their customer onboarding process:

Online Fraud Prevention : 6 Steps That Businesses Can Adopt
Need of Online Fraud Prevention System

54% of businesses are somewhat confident about the security of their system. Only 40% are confident, who say that their system is unaffected by any attack or bad activity. The reason is that most of the businesses give more importance to conveniency than security. These businesses then face heavy loss which costs much more than the cost of security adoption.

Customers need Protection

66% of the customers want a secure online Fraud Prevention System. They want their identity and personal information to be protected and not to be used in any malicious activity. These concerns demand online marketplace to take serious measures in order to prevent the data and money of their customers.

Prevent Money Laundering and fraudulent transactions

67% of fraudulent transactions remain undetected. Who belongs to these transactions? What is their identity? These questions should not remain unanswered as they carry a heavy cost. For money launderers, the online marketplace is an attractive target which can help them in money laundering.
There should be proper AML checks in the system which catches them on the spot and suspend their activities and transactions.


Fraudsters activities fluctuate with respect to time and behaviours. These activities must be monitored actively and so the adoption of updated technology should be ensured. The above steps are the primary ones which need to be the part of any online business. The need for security measures varies according to the business type and fraud potential risks associated with it. To mitigate these risks, a proper protection curriculum should be shared in the business environment. This can help in remarkable business development with respect to both revenue and reputation.

Looking for Online Fraud Prevention: Here Is What You Can Do

Looking for Online Fraud Prevention: Here Is What You Can Do

In an increasingly digital world, it is extremely important for online businesses to identify fraudulent activities happening in their system. In an online marketplace, a large number of transactions take place every second. Among those, 67% of fraudulent transactions remain undetected which results in heavy loss. According to the end 2018 record, online fraud has reached a loss of $6.4 billion. Fraudsters are always in search of the vulnerabilities in the system, they exploit the entry points and perform malicious activities. Online businesses if on the side focus on the better user experience in customer onboarding, on the other hand, they lack the security measures need for Online Fraud Prevention. It is a crucial need for banks, financial institutions, and online marketplace to reduce the risks of online payment scams and introduce high-level security in their system.
xOnline frauds are of different types. The purpose and intention behind each fraud could be the same only the way is different. Some common types are:
Identity Theft: Cybercriminals attack the system to get the personal information of the people and use them maliciously be assuming it to be someone else’ identity.
Credit Card Fraud: Fraudsters make a purchase into the weak website, enter all the essential information and fool the system using the credit card they have stolen.
Email Phishing Fraud: The fraudster sends an email to the victim (could be a bank employee) which appears to be an official email from some financial authority. This email contains the link which redirects the other person onto a login page of the bank appearing to be exactly the same as their official website. Once the employee enters all login credentials, the scammer gets all the personal information and uses the account for malicious activities.

Industries Affected by Online Fraud

63% of industries have experienced fraudulent online losses. With industrial digital transformation in both front-end and back-end operations, there is a need to take high-security measures against online fraud prevention. 75% of online businesses want a secure online system. For this to achieve, online businesses require solutions that enable trust within and out of the organization. Some of the major industries who faced online fraud are:

Online Retail Industry

In 2019, e-commerce sales are expected to account for 13.7% of retail sales worldwide. E-commerce sales are estimated to be increased by more than 240% which is $4.48 trillion by 2021. If on one side, this massive amount shows the demand for e-commerce on the other side, there is a record of 6% online frauds in the retail industry. The transactions happening in bulk are the great opportunities for the fraudsters to enter into the system. In the retail industry, the highest fraud is inventory fraud and due to a fake credit card. It is necessary for the online retail industry to secure its system in order to prevent online fraud.

Gambling Industry

Today, the gambling industry is generating a huge revenue which was $44 billion in 2016 and is expected to be $81 billion by 2022. The gambling industry is a very tempting platform for money launderers and cybercriminals. A recent report shows an $82 billion loss in the gambling industry due to Card Not Present (CNP) attacks. Also, 3.5% of all online payments that take place are fraudulent. The gambling industry needs to implement AML and KYC based checks back in their system to prevent cyberattacks and money laundering activities.

Healthcare Industry

The healthcare industry holds sensitive information regarding patients and hospitals. This information needs to be stored in a secured database in order to prevent data loss due to Online Fraud Prevention. In 2018, a report shows a $2 billion loss due to online fraudulent activities. This loss merely is not only associated o the bill healthcare industry paid but also the lives of several people were affected. The data of patients which includes insurance details, medical history, and personal information is stolen. Fraudsters use it to do money laundering, track their insurance details and blackmail them. For the healthcare industry, it is important to secure their data with significant security measures in order to prevent their system and patients from the heavy risks.

Online Fraud Protection

Online businesses should adopt serious security measures to mitigate the risks of online fraud. For this, identity verification and authentication are compulsory. Each identity entering into the system should be verified under certain AML and KYC regulatory compliances. The banking industry and financial institutions can prevent their system from cyberattacks using KYC compliance. This will reduce the risks of credit card fraud and online payment scams. Biometric verification (fingerprints, iris scanning, facial recognition, etc.) can help in customer verification. There are multiple other ways to verify and authenticate users. Below is a chart that shows the percentage of verification methods adopted by multiple online industries:
Online Fraud detection and prevention methods businesses

Regulation Governing online Fraud Prevention


General Data Protection Regulation (GDPR) is the EU’s most vital regulation for privacy protection. GDPR presents certain rules regarding how the data of people should be gathered, used, manage and protect. For any online business that holds any sensitive information are obligated towards the regulations defined in GDPR.


BaFin is the financial regulatory authority for Germany. On the basis of European supervisory standards, BaFin takes risk-oriented security approaches that are appropriate for industries and online businesses. It ensures reliability in the financial market and introduce policies accordingly.


PSD2 in the EU forms regulations that support forms of payment institutions, introduce interaction methods and facilitate open banking. Under these regulations, online businesses map their systems and provide their customers with several services.


EU’s regulation that defines policies for trust services and electronic verification of customers. These services help in the identification and verification of individuals online and through electronic documents. Banks and financial institutions can implement ceratin functionalities based on the regulation of eIDAS in order to prevent online payment fraud.


For any online business, along with better user experience, the implementation of security measures is equally important. The cost businesses pay with vulnerable systems not only affect the economy but also result in inevitable damage to business reputation. Adoption of secure technological solutions can lessen the risks of heavy fines and business fall. Also, this helps to fulfill the previous loss by encountering them in the future.

Loan Fraud Detection

What is Loan Fraud and How to Detect it?

Loan fraud simply means when someone uses your identity to illegally obtain a loan. The crime has many variations. In the US, for example, mortgage fraud is the most common. Catching loan thieves can be challenging. The fraud can go unnoticed for quite some time, and gradually the debt starts piling up in your name. Here we share a brief guide on loan fraud and its detection.

What is Loan Fraud Detection?

Simply put, when someone provides false information on their loan application, it is loan fraud. This can be during the time of filling in the application or when receiving the loan. In many cases, the banks suffer a loss for providing loan to someone who is not entitled.
Interestingly, the bank (or someone at the bank) can also perpetrate loan fraud by producing a fraudulent loan application. Here, the borrower suffers financial loss.
Banks are not the only institutes that get sucked into the vortex of loan fraudsters. Loan agencies are also on their hit list. In fact, these agencies are easier targets since they normally do not require detailed information from the borrower. So, loan thieves can steal information relatively easier and get a quick loan.
Payday loans are the most frequently sought after loans. They are small in quantity and are easy to acquire. Sometimes the loan thieves could apply for much larger items such as a car, business loan or a house.

How to Detect Loan Fraud?

Loan Fraud Detection can be tricky. Loan thieves frequently change banks or states, making it difficult to spot patterns or a business trail. However, there are red flags that the banks can look out for;

  • Multiple Businesses Under One Person’s Name

It’s a red flag when a person owns several businesses in under one name, especially when there isn’t much income to back up that claim. This scheme is prevalent among money launderers.

  • No Physical Location or Address of Business

A business without a physical address should draw suspicion. Although, in this age of the internet, it is not that uncommon to have solely an online business. This should trigger further investigation though. So if it seems to be a physical business, questions about the number of employees, the nature of the business or even a mail drop address make sense.

  • A Startup Idea is not a Running Business

Startup initiatives are mushrooming. However, a new business usually carries a lot of risks. Banks and loan institutes need to be very careful in lending money to these. It makes logical sense to inquire about the financial and operational performance of the company before signing a loan agreement.

  • Lack of References

It is normal to ask for references from a person or a business seeking a loan. A lack of convincing reference(s) is not a good sign. Some might consider it a burden, but a person or business with a credible network carries Loan Fraud Detection.

  • Inflated Earnings

Normally, businesses would inflate their earnings in order to score a bigger loan from banks. To spot this in time, a detailed evaluation of the business is necessary. Yes, it can be challenging. The lender might have to hire a seasoned financial analyst to help with accepting or rejecting a loan application. Cases of companies ‘cooking’ their books to impress investors and analysts are not uncommon.

  • Lack of Financial Audits

It is wise not to rely on someone’s word alone, especially if it’s a company whose financials have not been audited by an independent auditing firm. An audit can be requested in cases where the bank is unsure about lending the money.
Screening customers before lending them credit is a standard fraud detection process. Banks do not have to do everything manually, they can use verification services that first verify the identity of the loan applicants and then assess the financial risk attached to those applicants by screening them through anti-money laundering databases and financial watchdog lists with real time Loan Fraud Detection.

How to Avoid Cryptocurrency Scams

Cryptocurrency Scams – Checklist for Protection

Headlines about some cryptocurrency exchange being hacked are not unusual. So far, hackers have stolen over 1 million bitcoins BTC from different exchanges. Despite financial regulatory checks, scammers come up with innovative schemes. This article looks at the top five ways how cryptocurrency scams work and how to avoid them.

1. Fake ICOs – Pump and Dump Coins

Initial coin offerings (ICOs) that ‘dump’ once they have attracted enough investment, are the most prevalent frauds. Such coins usually have no utility but lots of promises.

2. Phone Porting

In phone porting, scammers steal identity of the victim. Then, they call the phone service provider to transfer the number to another provider. Finally, they log the victim out of his own accounts (banks, exchanges, e-wallets etc.). The victim may try to reset passwords but the two step verification would not reach his phone.

3. Online Wallets or Centralised Exchange

Hackers love it when investors store cryptocurrencies in an online wallet. It makes the treasure susceptible to hacking attacks. Such breaches are quite a sophisticated. Even large cryptocurrency exchanges are vulnerable to these attacks.

4. Ponzi schemes

An ICO venture that feeds money to the earliest investors from the money of new investors is a Ponzi scheme. Coins that guarantee return are usually Ponzi cryptocurrency scams.

5. Shady Exchanges

A huge number of cryptocurrency exchanges do not uphold KYC and AML compliance. So, Which cryptocurrency exchange to trust? Plenty of dodgy exchanges are mushrooming. And many put up an online presence that look credible on the surface. Yet, a deeper evaluation reveals that they have ‘set up’ this persona to steal money from investors.

How to Avoid Cryptocurrency Scams

  • Institutes approving ICOs should run thorough background checks on the people launching coin. Anonymity in the wrong hands can be devastating. Screening ICO initiators can thwart scammers.
  • On the flip side, the exchanges that enlist coins can also run these background checks. Following KYC compliance also deters double-dealers.
  • Safety first! Investors should do their due diligence and use safe methods to store coins. They should also be realistic when evaluating an ICO. A coin promising to make money from sunshine is an obvious red flag.   

Cryptocurrency scams cannot be completely eradicated. But by integrating background checks and vigilance they become easier to spot. Investors cannot be greedy or careless. Only trade through credible cryptocurrency exchanges.

The onus also lies on the government and financial regulators. Only legitimate ICOs should be able to do business on exchanges. 

ID Verification

ID Verification Trends to Curb Online Frauds


Automated Identity Verification Can Play a Significant Role in Fraud Management

Fraud management plays an important role in preventing internet frauds and scams. Systems for online ID verification are contributing significantly towards fraud prevention. The previous year was an uphill battle against online frauds with nearly 1 billion personal identity records stolen during the year. With significant incidents of data breaches including the Marriott data breach, Amazon’s merchant fraud and Atlanta’s SamSam Ransomware infection. The landscape for cybersecurity and fraud protection, therefore, has to keep on evolving with time. 

As cybersecurity threats continue to become more sophisticated in nature, both customers and employees expect the technological landscape to develop solutions that can tackle them effectively. Identity and Access Management (IAM) systems have to improve continually to keep fraudulent activities at bay. Effective IAM is being used by businesses to achieve a number of outcomes including the management of identities, verification of users, and the management of access to applications and APIs (Application Programming Interface).

The future of identity verification systems depends on the amount and types of online frauds that take place. To date, cybercrimes and frauds show no signs of slowing down. Which is why the future of online ID verification continues to evolve and advance. The trends that the identity verification landscape that can be expected over time include;

Evolving Methods for Identity Authentication

Identity proofing or authentication has been a requirement where people have to be physically present to verify themselves and their identities. Financial institutions, banks, government agencies and retail merchants have always required physical proof of identity from a customer or user. But ever since the e-commerce market has gained its place in the industry, it is becoming harder for businesses to identify fraud. The age of the internet has made products and services more accessible than ever before. So why should the methods for identity authentication remain far behind?

As advanced technological solutions powered by artificial intelligence (AI) and machine learning, gain their place in the market, new methods for identity proofing have also emerged in the market. These solutions and systems are only expected to grow over the next few years. They are also expected to change the way people share their identities online or otherwise.

As the need for physical interactions, while conducting transactions decreases, alternatives are being developed for ID verification. The need for verification systems like knowledge-based authentication (KBA) is diminishing as they have proved to be vulnerable. Thus verification measures need to be developed that establish a better connection between authorities and the private sector businesses.

Passwordless Authentication Methods

Creating and remembering unique passwords has always been difficult for online users. Over a decade ago, Bill Gates analysed that password-based authentications will, over time, become obsolete. Sure enough, it seems that passwords alone are not enough to thwart cybercriminals. Moreover, the types of online activity also determine the kind of security a particular action requires. Fraudsters do not pay bills or order small, insignificant things online. Identity authentication measures are expected to evolve in as much that passwordless authentication will be used for trivial and low-risk activities.

Companies like VEON, Microsoft, Accenture and Capgemini have managed t develop advanced systems for identity and access management that use cloud automation and passwordless mobile sign-on that can cope with the challenges of identity theft and cybersecurity.

Behavioural Analytics and Machine Learning

As the applications of AI and machine learning technology become vast and widespread, systems for identity verification have also transformed to provide better and more information to businesses about their customers. Companies are increasingly collecting and using customer data to draw insights for marketing campaigns, improve customer services and fight fraud. Behavioural analytics use complex machine learning algorithms to analyse a customer’s purchase behaviour. Such systems rely on vast quantities of data. They use transactional data to detect suspicious activities. Drawing on a users’ past behaviour, the system is able to determine if a transaction is fraudulent. If suspicious activity is detected on a customer’s account, it reported to the company, who then takes the appropriate action against it.

Biometric Verifications Become More Common

Online businesses and financial institutions are increasingly making use of multi-factor or multi-layered authentication systems. As smartphones, these days have made online facial recognition a mainstream technology, facial biometrics are becoming the standard of online ID verification for companies. Just as the fingerprint authentication method took off, the face recognition ID verification method will be adopted by many businesses over the next few years.

Every company does not have the resources and technology to implement automated ID verification systems. Shufti Pro is an ID verification service that provides real-time verification results for document verifications, facial recognition as well as AML screening checks. It offers comprehensive fraud protection services through a complete KYC package.

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Fraud Detection

The Role of Artificial Intelligence in the Future Of Financial Fraud Detection

Until a few years ago Artificial Intelligence seemed like a thing from sci-fi movies. The whole concept seemed like fiction or a far fetched dream fed by wishful thinking. Then came personal assistants like Siri, Google Assistant, Bixby, Alexa and Cortana, which made the people realise that they could have something like a Jarvis in their homes as well. However, these are just known as weak AIs. Strong AIs are theoretically able to work with human cognitive abilities. Such advancing work in the field of AI is said to achieve tremendous goals in a number of fields including revolutionising the future of fraud detection.

Identity theft and fraud in the commercial sector has been a huge problem for nearly every merchant. Particularly since the increase in online buying of consumers, the number and types of online fraud have increased tenfolds. It is becoming an inevitable task for every business to implement productive anti-fraud solutions in their practices.

With the increase in online trade, cybercriminals have also found more intricate ways to defraud both businesses and end consumers. As the effect of access to information across the web snowballs, online scammers find new and more advanced ways to hoodwink retailers, online or otherwise.

Fraud in the Financial Sector

The financial sector, however, has been the most unfortunate victim of identity theft and online frauds and scams. MacAfee reported a loss of over 600 billion dollars to the global economy due to financial and other forms of cybercrimes. From Phishing scams to good old fashioned credit card to more modern fraud schemes including social engineering, card skimming, the Banking, Financial Services and the Insurance (BFSI) sector has seen the worst cases of frauds and has consequently suffered the most tremendous losses as well.

Read: How Augmented Intelligence is next stop in ID Verification Services?

The finance sector is constantly looking for ways to upgrade their systems an implement fraud protection measures, while cybercriminals are as a result looking and coming up with better and more advanced ways to hack into their databases or to compromise customer data to gain access to their finances. Such schemes are now being fought with advanced technology including machine learning and artificial intelligence.

The Market for Fraud Detection

The market for fraud detection and prevention services has gained a lot of popularity over the years, allowing the banking and the financial sector to fight fraudulent activities in an effective way. Up until now, the banking and finance sector was only able to put up walls against scammers or implement firefighting measures in case any scams surfaced.

In 2016 the entire market for such services was valued at 13.64 billion dollars. Better yet it is expected to cross 40 billion dollars by the year 2023. Primarily fraud prevention systems are software solutions that will provide conclusive and actionable solutions to identify frauds and block or at least limit any future occurrences.

Artificial Intelligence and Fraud Detection

Recently, the use of artificial intelligence in the fight against fraud has helped achieve an unprecedented level of success in detecting fraudulent activity. The idea is basically to fight fire with fire; if cybercriminals can use advanced tech to defraud the system, the same knowledge should be used to develop systems that can keep crooks out.

The idea of implementing AI-based models is to basically detect and predict identity theft and other scams commonly used by criminals to compromise financial institutions. The concept of big data comes useful herein. Since banks and financial institutes have on hand large amounts of customer data as well as transactional data, it can be used productively to predict patterns in data and look for any irregularities. This can make financial fraud detection a much easier feat for the BFSI industry.

Use of AI in Identity Verification Services

More than that, AI can now be used to detect fraudulent pursuits by enabling businesses to implement identity verification measures to authenticate the IDs of customers. Shufti Pro is a such an AI-based identity verification software that provides an array of Know Your Customer (KYC) services through an AI-based SaaS. It has made significant headway into developing fraud prevention techniques that enable the banking sector to put up sizable defences against online fraud and cybercrime.

Shufti Pro is currently providing the best identity theft protection services in the market. It provides fraud prevention services through an AI-based authentication system that verifies a user’s ID in under a minute. It is supported globally and has universal language support in its system. Not only that, its restful API enables banks, financial institutes and online retailers to integrate their web-based applications and modules without any downtime.

Fraud detection and Artificial Intelligence together have the potential to transform the future of financial fraud detection and has already made significant headway into it.

Fraud Prevention

5 Industries Where Anti Fraud Solutions are Gaining Prominence

Every profit generating business has some level of risk of falling victim to fraudulent activities. The constant threat of fraud in the market encourages businesses to seek out fraud detection and prevention services. The sector that is immensely vulnerable to and affected by frauds and scams is the Banking, Financial Services and Insurance (BFSI). Fraud, in general, is responsible for a loss of one trillion US dollars to both online retailers and financial service firms. However, the finance sector is not the only industry plagued with scammers and fraudsters. Such circumstances have led companies to seek fraud analytics and anti fraud services.

Anti Fraud Solutions on the Rise

Fraud analysis, however, is not enough; for businesses to take an on hands approach to battle fraud they need proper anti-fraud solutions. Businesses are now in need of user authentication services more than ever. Such services can take the form of identity verification services, single or multi-factor authentications and face verification services. Industries more prone to fraud have been implementing such solutions for a while now. However, some industries where fraud prevention techniques are gaining prominence include;

Cryptocurrency Sector

Conventional banking has always been ailed by fraud and scams. But since the crypto industry is a relatively new find, and more or less employs the same methods as traditional financing, it has also been affected heavily by fraudulent activities. Due to its primary presence being on the web, crypto is more prone to cybercrime, wherein lies its need to employ cybersecurity measures. Authentication services are the best solution to counter such threats. Their need for such solutions has led the crypto industry to KYC verification service providers. Due to the nature of their business, they also look for AML compliance measures which allow them to avoid financial and white-collar criminals.

E-Commerce Industry

Fraud in the e-commerce sector is not new. However, online retailers have had to bear the brunt of fraudulent activities from both the customer and the banks involved in their transactions. Therefore, proper verification of their customers has had immense advantages for them. Fraud prevention measures allow them to verify the customers’ addresses, thereby ensuring that they are selling to the right person and make sure that they do not have to face any chargebacks.

Travel and Hospitality Sector

One victim of identity and credit card fraud is the travel and hospitality sector. Scammers are widely known to steal identities to use for travelling and availing hospitality services. With fraud protection services now being provided by some companies, Hotels and airlines can make sure that all bookings and reservations made with them are from authentic customers rather than fraudsters or scammers looking to avail travelling and lodging services from a stolen ID or credit card.

Online Gaming Industry

Online Gaming has been emerging as a major player in the market gradually over the years. With the growth of advancement in the tech industry, gaming has also evolved into a significant revenue generating industry. The industry is no less fraught by scams and has been in need of fraud protection. Moreover, the gaming industry is also in need of age regulation, thereby requiring age verification of its users. Therefore, implementing ID verification and face verification services from a reliable identity verification service provider, they can ensure safe business practices.

Real Estate

The real estate industry is also known to be scammed by buyers, instead of the situation only running the other way round. Scammers usually target real estate businesses by providing fake financial details and a shady story into why they wish to buy an estate. Such scams can be avoided altogether by the real industry by implementing Know Your Customer (KYC) verification solutions. They ensure the business that their buyer is authentic and is providing legitimate details into his/her financials.

When it comes to identity verification services, Shufti Pro is a veteran in the market providing top of the line anti-fraud solutions to businesses, enabling them to ensure the ingenuity of their customers. Shufti Pro provides both KYC verification services as well as AML compliance to businesses through its state of the art AI-based authentication protocols.  It can be easily integrated into a business’s existing interface and is supported by all major web browsers in addition to having SDK integration for Android and iOS.

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