Businesses have long been involved in a cat and mouse game with internet fraudsters.
In a cut-throat digital commerce market, knowing how to build trust and loyalty with customers has never been more vital for businesses’ long-term commercial success. However, companies are operating in a hostile threat landscape, with the potential for customers experiencing fraud on their websites and apps posing a major risk to sustainable business growth.
As the digital economy has flourished, fraud has grown exponentially. Cybercrime creates more revenue than all of the world's drug trade combined, with annual losses predicted to reach $6 billion by 2021.
For too long fraud has been accepted as ‘the cost of doing business’ by certain companies. Unfortunately, this attitude perpetuates the vicious cycle of cybercrime, providing easy profit, and allows fraud to prosper. Inefficient traditional fraud prevention strategies have enabled fraudsters to learn from previous attacks and expand their operations.
The changing face of fraud
Whilst the majority of attacks detected by Arkose Labs are still automated, there is a growing trend in human sweatshops. This combined with the continual advancement of automated tools used to circumvent traditional fraud prevention means that businesses require a fresh approach to stamping out fraud.
Businesses need an intelligent, evolving fraud prevention solution that can stay ahead of attack patterns, and eliminate the financial incentives of fraud.
The far-reaching impact of fraud
The rising levels of fraud impacts businesses and individual consumers, as well as the wider society:
1. Rising costs and long-term reputational damage on individual businesses
Businesses spend huge sums on operational costs fighting fraud and lose billions each year in revenue. Fraud damages a company's reputation and can push the consumer towards competitors. It also can have long-term implications on profitability if customers lose trust in the security of their platforms.
2. Impact on individuals
The acceptance of fraud as a cost of doing business has had a significant impact on hundreds of thousands of individuals. For example, victims of account hacking or identity theft are left personally trying to reclaim losses and secure their digital presence.
3. The effect on wider society
The socio-economic impact of fraud is far-reaching. The connected digital eco-systems mean there are multiple avenues where the proceeds of fraud can be easily laundered to fund illegal activity, including terrorism, pornography, and in some cases, influence the result of elections.
A vision for a world of zero tolerance for fraud
There has been a lack of effective fraud prevention strategies on the market. Many existing solutions aimed at blocking automated traffic alienate customers with a success rate at just 65% among genuine users, while fraudsters are easily able to trick the systems into accepting fraudulent responses en masse.
To effectively manage fraud and abuse in this rapidly evolving ecosystem, we need a long-term remediation approach that evolves to pre-empt and circumnavigate attack patterns.
Fraud can only be sustained when the incentive outweighs the cost. Companies need a solution that means the attacks become economically unviable for fraudsters whilst simultaneously ensuring that they do not create friction for good customers.
Arkose Labs’ core principles:
- To break the economics of fraud so that it becomes unprofitable.
- Specifically, target both human-driven and automated attacks by introducing graduated challenges based on constant risk assessment.
- To stop fraud long-term by continuously evolving challenges so that fraudsters cannot learn to bypass systems at scale.
- Provide a platform that acts as an intermediary between the customer and fraudster, shifting the attack surface away from the business.
Investment in fraud prevention solutions among businesses has never been higher and yet the volume and severity of fraud continue to rise.
Reactive approaches to fraud prevention have not been able to address the core issue - the underlying economic incentive behind cybercrime - and so the vicious cycle of cybercrime and mitigation strategies has continued.
In order to tackle cybercrime long term, we must adopt a zero-tolerance approach to fraud and put robust authentication challenges in place that make it economically non-viable for fraudsters.
By combining sophisticated, risk-based profiling with intelligent step-up that saps fraudsters’ time and resources, we can break the cycle of reactive fraud prevention methodologies. This will help companies to know how to build trust with customers and allow businesses to invest in growth rather than fighting a losing battle against cybercrime.
To explore this topic further check out our whitepaper, ‘Building Customer Trust with Smarter Authentication’, click Download below.