Proofing fraud prevention management in times of economic downturn

Friday 17 February 2023 09:08 CET | Editor: Raluca Ochiana | Interview

We talked to Amanda Mickleburgh, Director, Merchant Fraud Product at ACI Worldwide, about proofing the fraud prevention solutions merchants can opt for to stay ahead of fraudsters in these difficult economic times.


What is the impact of the economic downturn on threats and fraud?

Fraudsters have been quick to exploit the current cost-of-living crisis for their own gain, adapting threat tactics and targeting the vulnerable. Consumers are increasingly cost and discount driven, making them more likely to buy from ‘cheaper’ unfamiliar websites, foreign marketplaces, or shady links where they may be at higher risk of fraud, fake goods, or ID theft.

However, consumers can be both the bad actors and the victims. Economic pressure can tempt them to abuse return, refund, and chargeback policies, so we can expect tougher safeguards to help tackle this. Visa, for example, has changed its requirements for how much and the types of evidence a business must submit to resolve customer disputes pre-chargeback, and we’re expecting other businesses to adopt similar policies.

What are the top fraud trends to watch in 2023?

The cost of fraud is likely to increase even further

Cybercriminals continue to attack a wider set of payment methods, including contactless, mobile apps, and digital wallets. Every fraudulent transaction now costs 3.75 times the lost transaction value – 19.8% higher than pre-COVID-19. ACI’s response tools aim to improve fraud detection and respond quickly to fraud attacks. Our incremental learning solution, self-learning models, not only help to improve fraud detection, by up to 85%, but can also reduce fraud losses by up to 75%.

Fraud will become even more diverse, sophisticated, and targeted

Our own data shows a ramping up of synthetic fraud threats fuelled by BOT attacks, phishing scams, and account takeovers. Identity fraud continues to be an issue. We are also seeing a significant increase in the average ticket value of friendly fraud, which indicates that fraudsters are targeting high-value items like electronics and travel.

Attitudes to fraud prevention will shift as it gains ground as a revenue booster

Stakeholders are waking up to the fact that there are advantages to be gained beyond mitigating risk and protecting against reputational damage. Today’s advanced real-time fraud management solutions can be integrated within the payments flow, helping them to cut fraud, reduce expensive chargebacks, and minimise false declines – all of which positively impacts a merchant’s bottom line and growth.

As global website traffic is going down, so does the growth of ecommerce. How can merchants increase ecommerce conversion while mitigating the current economic impact?

When evaluating vendors and solutions, decision makers should focus on customer experience, as well as ROI. Advanced fraud management with smart decision engines can help avoid cart abandonment by reducing false positives and checkout friction to provide more seamless shopping experiences.

As customers feel the pinch from rising inflation and economic recession, they’re demanding more streamlining and efficiency in the way they pay for goods and services, how they are delivered, and how they are rewarded. Merchants can encourage greater acquisition and conversion by offering more flexible payment methods, home delivery options, and loyalty programmes. But they need to do this without opening the door to more fraudsters, for example, by expanding the fraud detection’s role to encompass a broader range of use cases like promotional, reseller, and loyalty programmes.

How can management be made to see the true value of investing in the latest fraud prevention technology from a third-party provider?

To shift the decision lens from fraud detection to fraud prevention, management must rethink its value for the entire business and recognise providers as strategic growth partners. End-to-end fraud management improves merchants’ core business without taking its eyes off selling, by helping to address key challenges around conversion, operational efficiency, and resource management.

Advanced fraud prevention technology and orchestration, integrated directly into the payment flow, ensures operations are scalable, fit for growth, and more able to support national and international expansion with geo-compliance. It provides easier and more accurate fraud detection, real-time decisioning, and strong payment intelligence analytics, so merchants can make better decisions, take greater control of costs, and deliver smoother experiences.

Above all, it can do this without putting excessive pressure on existing resources by using automated tools, intuitive customisation, and consolidated dashboards. Fraud prevention providers can also help to tackle talent shortages, acting as an extension to internal teams and providing additional technical knowledge, as well as sector and geo expertise.

Lastly, do you have some practical tips for the fraud team who need to cope with tighter budgets and smaller teams? Do you think optimising the usage of current tools or automating them can help the fraud team mitigate risks and threats better?

Manual processes are time consuming and costly. Take a closer look at workflows and see where you can increase automation for faster response time and more efficient decisioning.

Leverage advanced technology like sophisticated machine learning (ML) that learns automatically in real-time without retraining. It reduces operational burden and responds to changing patterns and behaviours immediately. In production, ACI incremental learning has been shown to outperform traditional ML by 15%.

Remember experienced providers like ACI have global payments risk optimisation teams that can provide much needed support and talent – lean on these to plug gaps in your capability and help make platforms and processes more efficient.

This editorial is part of The Paypers' Fraud Prevention in Ecommerce Report 2022-2023, the ultimate source of knowledge that delves into the world of fraud prevention, revealing the most effective security methods for companies to stay one step away from bad actors and secure their businesses. 


About Amanda Mickleburgh

Amanda Mickleburgh has held a variety of strategic roles since joining ACI Worldwide in 2007, with a strong focus on ecommerce fraud prevention. Specifically, she has developed expertise in leveraging data intelligence to aide checkout conversion and remove friction from payment flows. Amanda also joined the Merchant Risk Council (MRC) European Advisory Board in 2021 and, more recently, she has been appointed Co-Chair, deepening collaborations with industry experts.

About ACI Worldwide

ACI Worldwide is a global leader in mission-critical, real-time payments software. Our proven, secure, and scalable software solutions enable leading corporations, fintechs, and financial disruptors to process and manage digital payments, power omnicommerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with a local presence to drive the real-time digital transformation of payments and commerce.

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Keywords: fraud prevention, ecommerce, marketplace, phishing, identity fraud, merchants, digitalisation, machine learning
Categories: Fraud & Financial Crime
Companies: ACI Worldwide
Countries: World
This article is part of category

Fraud & Financial Crime

ACI Worldwide

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