The Best Fraud Prevention and Detection Tools for 2024

This year is set to be one of change and renewal for many businesses. The pandemic has accelerated digital transformation, and many business models need to be updated for the post covid age.

For instance, we’ve already seen how product managers need to up their game and how digital marketing may change.  

But today, we’re going to look at a growing challenge: how to fight fraud with the best fraud prevention and detection tools you can get in 2024. We’ll look at some of the best features you should get, and also what kind of integration makes sense depending on your business model.

1. Built-in Fraud Prevention Tools

If you accept payments online, chances are that your payment gateway already offers some kind of fraud protection service. It can be optional, so always make sure you contact them for more information. For instance, Stripe and Shopify both have their own built-in solutions (Radar for Stripe, and Fraud Protect for Shopify)

These work by using card data from their entire payment network, which helps them spot suspicious purchases and block them before it’s too late.

The advantage of using these services is that it’s easy and convenient. It’s unsupervised, which means you can go about your daily business without worrying about doing anything.

The downside, however, is that you don’t have much control over what gets approved or not. And worse: you may actually have high rates of false positives, also known as customer insult rate. This means that some payments are blocked when they should have been legitimate – which can send customers towards the competition.

So you will be choosing convenience over flexibility and customization options. This may be a great solution for certain small businesses who don’t want to think about fraud too much. But if you have small margins because of false positives and that every payment counts for your company, it’s worth checking out options that will give you a lot more control over your detection, investigation, and prevention for future fraud cases.

2. In-House Fraud Prevention 

If you have the budget for it, building a fraud prevention solution yourself is one of the best ways to stay in control of everything. 

You will be able to tailor risk management to your specific business needs, which helps its efficiency in the long run.

However, there are two key challenges: you need to work on both the IT infrastructure and staffing a risk management team. This can be costly, and it’s hard to scale your protection up and down depending on how often you get targeted by fraudsters. 

The staffing issues can be the most demanding for small businesses. You need to hire a specialist or a whole team of them who understand what to look for in your business data. As you may already know, hiring an employee is always expensive and the onboarding can take several months. It’s therefore of the utmost importance that you have worked out the potential ROI on building your own system in-house.

3. Cloud-Based and End-to-End Fraud Detection

For businesses who don’t have the resources to operate their own fraud detection department, it can help to use third party services. These work just like web apps, or any other SaaS (software as a service).

There are numerous benefits to choosing this option. First, you get some of the best anti-fraud technology available, because these anti-fraud providers are always building the latest products. This means you could get advanced features such as Machine Learning and Device Fingerprinting. 

You also get customer support, and there’s no need for you to update anything manually – it’s all taken care of from the vendor side.

The biggest challenge is probably to find a solution that integrates easily with your own platform. For e-commerce websites running on Woocommerce, the WordPress security requirements are easy to find. When it comes to proprietary platforms, the needs are more challenging to pin down.

To learn more check out Namecheap’s guide to WordPress Security The best providers will help you when setting things up, and you will only need one developer on your team to read through the API. Some even offer a GUI interface so you can manage things very easily without much technical knowledge.

4. Chrome Plugin 

The latest solution for fraud prevention is to use a plugin for Google Chrome that instantly gives you more information about your users. For instance, the SEON data enrichment plugin lets you enrich data based on a single email address, phone number or IP address, which will let you know:

• Where the user is based in the world
• If their email address is valid
• If it’s from a suspicious domain
• If they use a VPN or TOR
• If they use a real phone or a virtual SIM card

Best of all, you can get a risk score, which allows you to instantly see if it’s worth allowing them on your site or not. 

The key advantage of course is that there is no need for a full integration, so this is an extremely lightweight way of acquiring more user data without building an entire middleware system into your own platform. 

Data enrichment via browser extensions is very rare, but when you choose the right provider, make sure you look at how fast the data is acquired. You don’t want to slow down your customers while the system works in the background. 

Conclusion

Choosing a good fraud prevention tool is increasingly seen as a business decision because you need to take into account chargeback rates, hacking, transaction fraud and even identity fraud for your online platform.

It’s important not just to choose the solution that is the most affordable, but also to focus on one that is scalable, and that will grow along with your business as your fraud challenges evolve. 

It’s also important to consider how easy the integration is: you don’t want to slow down your business operations too long while you’re getting set up. 

Hopefully, this post will give you a good primer on where to look for your next solution, so you can grow your business safely this year.