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Which fraud investments will deliver the biggest payoff?

Criminals are making lots of investments in fraud, so it's critical that financial institutions get the biggest bang for their anti-fraud buck. Here are the areas I suggest investigating for anti-fraud ROI:

1. Make more stringent CNP (card-not-present) authorizations.  With the increased usage of cards on the internet and the insecurity of users’ computers and merchant computer network compromises, relying on charge backs alone is not an option.  The transactions already run through your card fraud detection systems.

2. Look for more advanced analytics in your card fraud detection system.  Ask questions from your providers on how well your current system compares to what is available in the market, as well as what the ROI is for the new innovations, particularly around card-not-present and ATM fraud.

3. Start an initiative to track fraud across your institution.  You may be surprised by the results.  Use your data to determine the modus operandi that criminals are using and prioritize the areas that need remediation.  Problems don’t fix themselves, they only get worse.

4. Put together the business case for a customer-level fraud detection system. If you don't manage fraud at a customer level, you're vulnerable to fraudsters targeting one channel for compromise and then perpetrating the fraud across other channels—something I’ve argued before on this blog. Your fraud system should span the transaction channels your customers use, looking for both first-party fraud and third-party fraud.

Of course this list is by no means all-inclusive. If you have anti-fraud ROI success stories of your own, I welcome you to share them here on our blog.

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