In the world of financial crime major fraud events tend to capture attention; the insidious nature of micro fraud lies in its ability to exploit the same vulnerabilities as larger-scale attacks while evading detection.
How much is micro fraud really costing you?
Due to their low individual impact they can operate beneath the radar of traditional detection systems. Going unnoticed and unchallenged, often institutions thinking it’s just too hard and costly to track. The consequences, however, are far from minor. Over time, these accumulated losses can significantly erode profits and create large operational inefficiencies. Let’s not forget the frustration this also has to your customers!
Are you even tracking these small losses?
The modus operandi of micro fraudsters varies widely. They may create fake accounts, engage in refund abuse, test stolen credit cards, or even exploit chargeback mechanisms for fraudulent gains.
Are traditional fraud detection tools blind to micro fraud?
These diverse tactics often share a common thread: they capitalise on the gaps and limitations of conventional fraud prevention tools that prioritise high-value transactions. Which, let’s be fair, is pretty much all of them.
It’s time for financial institutions to acknowledge the micro fraud problem and do something about it.
The adoption of cutting-edge technology that can operate at lightning-fast speeds with great accuracy is crucial. Behavioural-based machine learning algorithms, offer a powerful means of analysing vast datasets to identify subtle patterns and anomalies that signal fraudulent activity, even in low-value transactions. This is hard to do right: This is hard to do right: it requires simultaneous analysis of accounts, transactions, and counterparties, which is challenging. Additionally, entity resolution can connect seemingly disparate accounts and transactions, revealing hidden networks of fraudsters operating on a micro level. You ideally need behavioural ML and entity resolution together to really combat these kinds of frauds.
What solutions exist to address this hidden threat?
Addressing micro fraud is a strategic imperative given the losses involved. And it’s not just about preserving profits either: get it right and you bolster your reputation as trusted guardians of your customers’ financial well-being. But the first step in mitigating this hidden threat is acknowledging its existence and understanding its unique characteristics. The second step is to talk to us.
Nothing we know of is as accurate and fast!
We offer a proven approach to detecting these types of frauds using a proprietary blend of entity resolution and behavioural analytics that, crucially, operate in true real-time.
Contact us today to learn more about how AlertSpeed can protect your institution from micro fraud.
Comments