What is a Fraud Detection Tool?

What is a fraud detection tool?

A fraud detection tool is a software application or system designed to help identify and prevent fraudulent activities. Used across various industries—such as financial services, ecommerce, hospitality, insurance and the public sector—these solutions are a part of a robust fraud prevention strategy.  They can automatically analyze and detect suspicious or abnormal patterns of behavior that may indicate fraud, thereby better protecting businesses and individuals from financial and reputational losses.

Fraud detection tools typically collect and analyze a large volume of data — including identity, device, transaction records, user behavior and historical data — to evaluate risk and distinguish legitimate consumers from fraudsters. Orchestrating identity, device and behavioral insights helps organizations better secure trust across channels and deliver smoother experiences for consumers.

Identity insights: Help expose fraud risks by more confidently verifying consumer identities against robust credit, non-credit and digital data sources.

• Identity verification — Welcome new customers with higher confidence in their identities and reduced step-up challenges.
• Document verification — Digitally authenticate official documents to reduce the risk of identity fraud while offering a more secure and convenient digital customer experience.

Digital insights: Better determine the riskiness of anonymous users in real time with insights into device recognition, context and behaviors.

• Device proofing — Better identify devices with previous connections to fraud without imposing unnecessary friction on trustworthy consumers.
• IP intelligence — Make better-informed decisions on whom to serve or block via robust IP geolocation, ownership and routing data.

Omnichannel authentication: Provide smoother and more secure experiences across call center and digital channels. Leverage phone and device data to help separate legitimate consumer interactions from potentially risky ones to mitigate account takeover fraud.

• Step-up authentication — Help ensure safer and friction-right delivery of step-up authentication, including one-time passcodes.
• Inbound authentication — Improve customer experiences, expedite call resolution and reduce fraud risk by treating each inbound caller according to their trustworthiness.

Fraud analytics: Streamline transactions, help detect hidden connections and proactively monitor threats with custom- and purpose-built models, superior data and analytic expertise.

• Models and scores — Stay ahead of evolving fraud threats with custom-built fraud prevention models and analytics.
• Model attributes — Adapt to evolving fraud circumstances proactively. Meet specific and emerging fraud challenges while building trust with your customers.

How are fraud detection tools used?

Fraud detection tools play a crucial role in helping protect organizations and customers from financial and reputational harm arising from fraud. While fraud detection tools are used throughout the customer lifecycle, three key areas of risk include:  

• Account opening — Use of fraudulently obtained identity data (real or synthetic) to register or apply for services and open accounts.
• Account login — Accessing an account belonging to someone else for illicit gain.
• Account or transaction activity — Any business transaction in which fraud could occur, including account changes, applications, purchases, returns, claims or transfers.