The role of fraud detection software

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Fraud detection software refers to securing your business and its accounts. By using fraud detection software, you can lock out bad actors from your financial institutions, safeguard sensitive information, and boost confidence in your security systems. 

Here, we’ll outline everything you need to know about fraud detection software, including what fraud detection tools do, the benefits they provide, and the key features you need to look out for.

How to Detect Fraud? The Role of Fraud Detection Software

A fraud detection tool is designed to prevent fraudulent actors from accessing a service or a user’s account. These solutions work by verifying the identity of a user before granting them access to the service or account.

Generally speaking, fraud detection tools are used in three separate instances: verifying a user’s ID, as part of the onboarding process, and verifying the identity of returning users. Let’s take a look at each instance in greater detail.

ID verification

Fraud detection software can be used to verify a user’s ID. In doing so, it can detect fakes and documents that have been tampered with.

In order to verify the identity documents of real people, these fraud detection tools ask the user to take a picture of their government-issued ID. The tool then automatically detects whether it’s a driver’s license, passport, residence permit, or standard ID. Following this, it then instructs the user whether the back of the ID is required, making the experience seamless.

This data is then analyzed and the business is provided with a decision about the authenticity of the document in a matter of seconds.

Onboarding

These pieces of fraud detection software ask the user to snap a photo of their ID and provide a selfie before they’re allowed to create an account or access a service for the first time.

The user’s ID is then verified and their selfie is checked for likeness. An identity verification solution can reach a decision in around six seconds and users enjoy a frictionless experience.

Verifying the identity of returning users

On top of this, fraud detection tools can also be used to verify the identity of a returning customer. Fraud prevention tools such as these use biometric authentication in order to confirm that a returning user is exactly who they’re claiming to be. In doing so, these tools use a selfie-based authentication method that is far more secure than using a password or one-time passcode.

In order to gain access to an account or service, a user must provide the fraud detection software with a selfie. The tool then checks the supplied image for liveness and realness in real time. To complete the process, it compares the selfie to a previously verified face and identity. An authentication decision can be reached in as little as one second. 

Why is fraud detection so important for organizations?

Fraud detection tools are vital for stopping fraudulent activity from taking place. This process involves a criminal actor using a person’s stolen details to commit a crime.

Examples of common types of identity fraud risks include:

• Opening a new bank account
• Obtaining credit cards & card numbers (credit card fraud), loans, or benefits
• Ordering goods in someone else’s name
• Obtaining genuine documents like a passport or a driving license in someone else’s name

Identity fraud is a serious crime. Sadly, it’s also more common than we’d like. Our 2021 Identity Fraud Report revealed that:

• Identity fraud makes up close to two-thirds of all fraud incidents globally and has doubled compared to 2020
• Global fraud has increased in the U.S. & Europe, with Europe seeing its fraud rate double from 2020

As a business, you have a responsibility to prevent fraudsters from accessing your services. This is particularly the case if your business is a ‘financial gatekeeper’, such as an accountancy firm, a bank, or a law firm.

Thankfully, fraud detection tools like ours can help you carry out the identification and verification process seamlessly. This means that these tools can detect fraud before a criminal actor is able to access any money or sensitive information.

If you allow fraudsters to access accounts or your services, then you may struggle from both reputational and financial damage. As well as leading to negative headlines, instances of identity fraud and identity theft can cause customers to leave your business. If you’re subject to know your customer (KYC) regulations, then you also may face huge fines from regulators.

Benefits of using a fraud detection platform

By using a fraud detection platform, your business will experience a number of benefits, including:

Increased security

By proactively preventing fraud and anti money laundering from occurring, you can secure accounts. With a proper fraud prevention measures in place (rather than simply relying on passwords and one-time passcodes), your business can make sure that accounts are locked down and cannot be accessed by fraudsters.

With increased security in place, bad actors will be less likely to target your accounts and services.

Boosted confidence

When you put effective fraud detection and prevention in place, your customers will enjoy increased confidence in your business and its operations. This is because they know their data and personal information are safe and cannot be accessed by fraudsters. This, in turn, can lead to an increase in business if your competitors fail to put equivalent systems in place and allow fraudulent attacks to happen.

Lessen the risk of damage

With these systems in place, you dramatically lessen the likelihood of hackers and fraudsters gaining access to accounts and personal data. As a result of this, you also significantly reduce the risk that your business will face reputational damage from allowing data breaches to happen. This also means you’ll greatly reduce the risk of facing a fine from regulatory bodies.

Lowers costs

By stopping fraud from taking place, a fraud detection platform can actually save you money. This is because, by reducing manual review rates, these pieces of software lower your operating costs. Plus, by stopping fraudulent actions before they take place, the platform can also significantly reduce costly chargebacks.

What you should look for in a fraud detection platform

The right fraud detection platform will stop fraud, build trust, and make the identity verification process simple.

Different tools suit different purposes, but the best tools on the market share three common traits: they’re fast, they’re easy for customers to use, and they’re accurate.

Speed

Customers expect a seamless experience when they try to sign up for a new service or access their account. While having the right security systems in place is vital, it’s equally important that these systems do not hinder customers. Due to this, top fraud detection platforms like ours automate as much of the process as possible in order to make it much quicker.

Thanks to a 98% check automation rate, our solutions can guide the user through the identity verification process in around six seconds. This means that customers face minimal disruption and you receive much higher conversion rates.

Easy to use

In the modern age, customers expect seamless experiences. These customers are also unwilling to part with their data unless you make the process and your motivations as transparent as possible.

Top fraud detection platforms the process clearly to the customer and then guide them through it, providing feedback along the way. By making the process easy and guiding your customers through that process on a step-by-step basis, you can boost conversions and verify more customers on the first try.

By providing real-time user feedback and reducing the number of steps in the process, top solutions like ours provide a top-class experience for customers. Ultimately, this means that we can verify 95% of your users on the first try. Again, this increases conversion by up to 30%.

Accuracy

Finally, to satisfy regulatory requirements, you also need to ensure that your chosen fraud detection software is accurate.

By employing highly accurate face detection and biometric authentication, we’ve ensured our solutions are as accurate as possible. In fact, as well as verifying 99% of users on their first try, our biometric authentication solution is also 99.99% accurate. This means you can have confidence in your system to keep bad actors at bay.

Prevent customers from being the victim of scams and attacks with Veriff - Request a demo

If your business would like to know more about how to prevent identity fraud and the steps it can take to stop bad actors from accessing its services, then book a consultation with Veriff today. We’ll explain exactly how we can help you meet compliance and KYC obligations.