According to a report by the Global Economic Crime and Fraud Survey, an average company experience no less than six instances of fraud today.

Cybercrime is rampant, and everyone from big corporate organizations to regular individuals is suffering from fraudulent activities left, right, and center.

It has become the need of the hour to protect your business against fraudulent activities at all times. Luckily, there are specialized tools in the market that can help you achieve formidable security efficiently.

What Are Fraud Detection Tools?

Companies suffer from frauds that amount to up to $42 billion, which include everything from customer fraud and asset misappropriation to various cybercrime and malware risks. 

Businesses are exposed to risks in every facet of their operations. Be it conducting sales online, hiring employees, communicating with third parties, or granting access to people to their internal systems. With the grand scale of operations businesses perform daily, often across the globe, it becomes genuinely challenging to protect the system from theft.

You simply cannot deny access to clients, contractors, or employees or monitor every action of their, breaching their privacy. This is where fraud detection tools, usually built using AI and ML to protect your data, can come to your aid.

Fraud detection tools check your infrastructure for any suspicious behavior and patterns and contain them from causing your system any damage, protecting it in the long run. They also record previous behaviors to help you analyze and prevent similar attempts in the future.

Benefits Of Using Fraud Detection Tools

Let’s figure out how inducting fraud detection tools into your business structure can benefit and grow your business in different ways.

1. Protect your system at all times

The most important benefit of having fraud detection in your business structure is to keep it protected from fraud at all times. 

Cybercriminals are constantly looking for newer ways to exploit the vulnerabilities of businesses’ safety nets. They rely on business owners not understanding the new and evolving technological complexities to exploit them in their favor. Basic knowledge of these topics helps you be more careful and proactive in your protection approach.

Fraud detection tools help you keep your business protected from their attacks by identifying suspicious behavior right away. They identify and contain malicious attempts by such people with the help of AI and Machine Learning technology.

seon.io is an excellent example of a fraud detection tool using ML. It uses historical data to suggest better ways to protect your system. It also identifies new and evolving attacks and molds its approach accordingly to keep cybercrime at bay.

2. Identify fraudulent activities right from the get-go

One of the most significant benefits of fraud detection is its role in limiting the damage a cyber attack causes. 

We talked about companies losing upward of $42 billion to security thefts. A fraud detection tool identifies a fraud right from the get-go to act against it in no time. This works tremendously in containing the theft in the least possible area and minimizing the damage in the long run. 

For example, a fraudster is attempting to enter your system through an unauthorized log-in by hacking the ID of an employee in the marketing segment. 

Now, the minute they hack the ID and enter the system, the fraud detection tool will catch them as the account is compromised. By being alerted about the fraud as soon as it happens, you can immediately inform the marketing department to check on the employee.

You can restrict their access to the system, freeze their account, and cut their access to any department or employee. Taking these steps reduces the damage to essentially one account and person while preserving the entire department.

3. Reduce costs and maintain a smooth flow of operations

When you have proactive fraud detection in place throughout your entire system, you’re able to run your operations smoothly without hassle. This helps you maintain the flow of the work you perform, increasing your productivity and reducing costs.

Conducting fraud prevention or review in a manual capacity is a pricey affair. The personnel will work out around 1000 to 1500 fraud reviews in a month on average, while one review will cost you somewhere from $2 to $5. 

Fraud detection tools help you significantly reduce your fraud operation costs as they bring automation to the process. They automatically review actions and processes to allow them to run their course. They can also determine if an order is authentic or not to accept or decline it.

The automated approach of the detection tools is much faster and more convenient. It ensures a smooth flow of operations. You don’t have to wait around for manual reviews to pick up orders, allowing you to take more orders.

4. Make better third-party deals and increase revenue

Fraud detection tools are excellent from a marketing standpoint as well. They help you build better relations with your clients, contractors, and the third parties you deal with. 

The programs built using AI and ML check every client interaction for fraud. They collect relevant information from precious interactions and use historical data to match their future interactions to gauge their authenticity. This helps you see if they are authentic or not and eliminate suspicious clients then and there.

Blocking out suspicious parties from interacting with your safeguards your business. It leaves only the authentic clients and contractors to interact and form bonds with. It helps you form strong bonds with genuine clients and strengthen your branding and marketing efforts.

Many companies make the mistake of identifying clients only once. This is harmful as they can be compromised at any point and corrupt your system by interacting with you as well. The wise thing to do would be to check for fraud with every single interaction you have with your third parties.

5. Reduce chargebacks

A chargeback allows a customer to fight back against fraud. It’s a protection mechanism that allows customers to get their money back on any fraudulent transaction they might have been subjected to. 

However, chargebacks are detrimental to businesses. Every time you have to do a chargeback, you lose money from your business while also hampering your reputation. Moreover, the frauds that are related to a chargeback itself have also emerged as a problem.

Every dollar lost in a chargeback fraud costs merchants and retailers 2.4 dollars.

Fraud detection tools help you avoid chargeback by scanning the transactions you engage with for suspicious behavior. So now, when a fraudster attempts to make a transaction with a compromised credit card, the fraud detection mechanism will deny the transaction altogether.

Preventing the transaction from occurring altogether has a two-fold benefit. First, it enhances your reputation regarding chargebacks. Second, it helps you identify fraudulent customers and block them from interacting with you in any capacity in the future. 

6. Build trust with customers and clients

Identifying authentic customers and clients and eliminating fraudulent ones with fraud detection go a long way in helping your business grow. 

When you identify the genuine parties you’re dealing with, you readily put more effort and resources into serving them better. Knowing association with them is going to be fruitful for you. You’ll work toward helping them better and building trust and strong bonds with them that will lay the foundation for future partnerships.

Procuring authentic clients and customers paves the way for dealing in authentic transactions as well. This helps you cut losses and increase your revenue by selling in genuine trade deals that grow your business.

7. Analyze, learn, and prevent future issues

Fraud detection works on the principle of evaluating current behavior in relation to past behavior. Current behavior needs to be congruent with past behavior and if it isn’t, it becomes grounds for further probing and determining the authenticity of the transaction.

This mechanism of fraud detection helps store data and analyze it. You’ll be able to generate reports that target specific areas for deep research. This analysis and research help you learn to identify suspicious behavior.

You can further use the analysis and the rich historical data to prevent fraudulent activities in the future, securing your business systems from getting compromised. Such a proactive approach helps you both learn and prevent even the smallest of damage from happening.

Conclusion

Cyberattacks are at an all-time high in the digital boom we’re experiencing today. It’s of utmost importance to safeguard your business against frauds of all kinds, such as malware attacks, cybercrime, and customer fraud.

Fraud detection tools provide fast, convenient, and proactive protection against various business frauds. They use AI and ML to collect relevant data to identify suspicious behavior in the system.

They are a must in every business arsenal to ensure protection against fraud at all times and a smooth flow of operations. 

Author bio

Atreyee Chowdhury is a freelance content writer with more than 10+ years of professional experience. She is passionate about helping SMBs and enterprises achieve their content marketing goals with her carefully crafted and compelling content. She loves to read, travel, and experiment with different cuisines in her free time. You can follow her on LinkedIn.