Today’s banking customers have numerous pathways to connect with their financial institutions on a 24/7 basis. Unfortunately, if fraudsters are able to exploit these pathways, they will inevitably pounce. Online fraud detection and prevention solutions work by rapidly reviewing data to detect if fraudulent activity is taking place and prevent it before a bank or customer experiences any losses.
These solutions can make the difference between stopping fraud in the first place and trying to fix any damage that has been done after the fact.
Why is online fraud detection and prevention important?
Online fraud occurs when fraudsters use digital channels to infiltrate a customers’ online account to make fraudulent purchases, transfer funds, or steal sensitive data.
Online fraud detection and prevention solutions are designed to stop different types of fraud before any harm occurs. It’s the difference between blowing out a match once it sparks and calling the fire department to contain it ablaze.
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In fact, one particular type of fraud highlights how important it is to take a preventative approach: Account takeovers (ATOs). ATOs can yield significant financial gains for fraudsters. Financial losses to consumers and FIs from ATOs rose by 72% last year to reach $6.8 billion, according to recent research.
What makes ATO attacks so concerning is the returns they yield for fraudsters. Fraudsters can use techniques like scripted attacks that enable them to input numerous login and password credentials in very little time. If even one combination is successful, they will be able to access a legitimate customer’s bank account or credit card without exerting much effort.
Once a fraudster gains access to the bank account, the fraudsters can authorize transfers using real-time person-to-person (P2P) services or wires to accounts that they control with little hope of funds getting recovered. In some cases, the victim might not even realize they were defrauded until they review their financial statements later.