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By Sift Product Team /
Online fraud is on the rise. Payment fraud is expected to cost online businesses $48B in 2023, up 16% from $41B in 2022. In order to reduce exposure to fraud and enable seamless customer experiences, companies must find the right online fraud prevention solution for their needs.
Read on for a breakdown of the common types of online fraud prevention solutions and how to evaluate their capabilities.
Online fraud prevention refers to the tools, techniques, and controls used to prevent, detect, and mitigate fraudulent activities carried out over the internet or other digital channels. Online fraud prevention is intended to protect businesses and their consumers from financial losses, reputational damage, and other negative consequences that can occur from online fraud, such as identity theft.
Online fraud prevention solutions tend to be delivered via one of these approaches:
There is no such thing as a one-size-fits-all approach to online fraud prevention, which is one reason that the lack of transparency and control in decision-as-a-service solutions can hinder online fraud prevention efforts, but generally speaking there are several important features.
Comprehensive online fraud prevention solutions, such as a Digital Trust & Safety platform, should include a decision engine to perform risk assessments, case management systems to group, investigate, and take action on transactions, orchestration with third-party data sources, reporting capabilities, the ability to simulate changes to policies, and consortium risk capabilities (e.g., the benefits of using a shared global network).
Furthermore, there are some key capabilities that businesses should consider for their online fraud prevention solutions:
To determine the best solution for your business, you’ll want to evaluate how the technology works across each of these key capabilities.
Choosing from among the majority of online fraud prevention solutions represents a “Goldilocks” dilemma; point solutions and single-purpose platforms lack full fraud prevention features and decision-as-a-service lacks transparency and control—but Digital Trust & Safety platforms get it “just right.”
Digital Trust & Safety platforms include a variety of unique features that are unavailable or limited in other online fraud prevention solutions, including:
These platforms tend to provide better detection than point solutions or single-purpose platforms because they offer better real-time machine learning and heuristics for fraudulent payments, account takeover, and spam content. On the other end of the spectrum, Digital Trust & Safety platforms tend to provide more transparency and control than decision-as-a-service because they offer customizable interfaces and controls.
Learn more about how to evaluate online fraud prevention solutions in Sift’s Evaluation guide for online fraud solutions.
Stop fraud, break down data silos, and lower friction with Sift.