Voice of the Industry

Digital transaction fraud: Stopping cybercriminals, not your customers

Wednesday 30 June 2021 10:01 CET | Editor: Alex Guzu | Voice of the industry

Reed Taussig, CEO of Outseer, discusses the changes in consumer behaviour and expectations that were brought on by the pandemic, outlining the future fraud challenges

In the face of digital transaction fraud, Outseer was inevitable. As the COVID-19 pandemic accelerated the growth of digital commerce and compressed a decade of transformation into a very small window of time, two dynamics took hold within the digital economy. Even as ecommerce transactions grew to top USD 4 trillion from USD 3 trillion in 2019, The Paypers reported that payment card schemes, issuing banks, and commerce providers experienced a corresponding rise in fraud.

Not just from lone wolves, mind you. We’re talking fully orchestrated attacks on global payment networks.

As a veteran of the fraud prevention and digital identity industry, I understood that the level and sophistication of cybercriminal activities was quickly developing into the digital economy's equivalent of DEFCON 1. By the end of 2020, online fraud in all its forms would earn as much as all the gains in ecommerce revenues seen during this period of unprecedented expansion.

Recognising the threat, it became clear that spinning out RSA's Fraud & Risk Intelligence business could enable us to expand our efforts and bring laser focus to delivering science-driven solutions for payments authentication and account monitoring. Our mission: liberate the world from digital transaction fraud.

Fraudsters always follow the money

That mission couldn't come at a more pivotal moment for the digital economy.

Today, the same dynamics underlying the seismic shift to digital channels is also driving entirely new payments models. Whether it's voice commerce, scan-and-go payments, or Starbucks offering finance products, transformative new payment models are cropping up every day. For banks, credit card issuers, and payment processes, innovation is, quite literally, the name of the game.

The bad news: consumer expectations for safe, seamless transactions through any device or channel they choose have hit the stratosphere. Even worse: that's the least of the challenges ahead.

With volumes of compromised card and personal data, account login credentials, phishing kits, and ransomware more available for sale or barter on the dark web, increasingly sophisticated cybercriminal organisations are angling for a slice of a rapidly growing pie.

Losses from illegal transactions using stolen credit card information are estimated to have topped USD 6.4 billion in 2020. Aite Group projects a 16.4% card-not-present (CNP) fraud in 2021. Across industries, account takeover (ATO) attacks account for more than USD 16 billion in losses, up 300% in 2020. Meanwhile, the financial and reputational damage done through brand impersonation scams and social engineering is incalculable.

Blocking fraud, not transactions

In our view, this kind of criminality simply cannot stand. We believe superior transaction experiences should not come with painful compromise.

By harnessing identity science and data from 20 billion annual transactions from a global consortium of 6,000 companies spanning every industry and geography, we're able to stop fraudulent transactions before they happen.

In fact, we set the benchmark for payments authentication, detecting account compromise fraud, and enabling friction-free customer experiences for more than 6,000 of the world's leading banks, credit card companies, payment providers, and more.

With the ability to differentiate between legitimate customers and fraudulent behaviors, we're able to achieve fraud detection rates as high as 95%, and intervention rates as low as 5% or less. Which means banks and card issuers can allow the vast majority of transactions to sail through uninterrupted, reserving step-up challenges for the very few that warrant closer scrutiny.

A battle fought better together

Stopping the scourge of digital transaction fraud takes innovation – cybercriminal organisations continuously evolve their tactics and so must we.

To that end, we actively extend our fraud, risk, and identity capabilities out to complementary providers of payments and authentication technologies. A good case in point is a recent edition to our ecosystem, Callsign, which is introducing behavioral biometrics for an even richer set of authentication signals.

This kind of collaborative ecosystem is crucial. Because the truth is, Outseer is looking beyond the payments and account fraud itself, to the true evil that lies beneath. Fraudulent transactions are often the enablers of everything from drug and human trafficking, to terrorism, and to the destabilisation of democracy.

As an extended team, Outseer has the ability to make the world a much safer place. By seeing what others can't, our aim is to enable superior transaction experiences that benefit our customers while making the digital economy an inhospitable place for anyone seeking to commit fraud.

Outseer may have been inevitable. But winning the fight against digital transaction fraud will depend on us all.

About Reed Taussig

Reed is a 35-year technology industry veteran, responsible for the overall strategy and execution of the Outseer business. He was most recently an operating executive at Marlin Equity Partners. Prior to that, Reed was CEO of ThreatMetrix, a SaaS company and leader in fraud prevention solutions based on digital identity intelligence, where he drove innovation and led growth.

About Outseer

Outseer is a leading technology company in the fight against payments fraud. Powered by cutting edge science and a suite of market-leading anti-fraud products, Outseer reliably tells the difference between authentic customers and fraudulent behaviour to stop fraud in its tracks.

Free Headlines in your E-mail

Every day we send out a free e-mail with the most important headlines of the last 24 hours.

Subscribe now

Keywords: online payments, online fraud, fraud management, payment fraud
Categories: Fraud & Financial Crime
Countries: World
This article is part of category

Fraud & Financial Crime

Industry Events