The rise of the digital economy has changed how consumers and businesses interact. While most of the changes have been positive, there is one notable downside: an increase in fraud and scams.
Fraud can devastate customers and businesses alike, with banks and other highly-regulated institutions facing greater risk management challenges.
In this blog, we share ways banks can beat credit card fraud, protecting their customers and their reputation.
Defining credit card fraud
Credit card fraud is any fraud that uses (you guessed it) a credit card to buy goods or services without paying for them – or to steal money from an account.
Like most scams, the exact nature of credit card fraud can vary, but there are 4 main categories:
1. Physical theft: when a lost or stolen card is used without the owner’s permission
2. Skimming: when a card is cloned or copied using a swipe machine
3. Detail theft: when information like name, card number and address are stolen to be used either online or over the phone
4. Application fraud: when fraudulent credit applications are made in the victim’s name without their knowledge
The most common result of credit card fraud is an unrecognised transaction. This could be an unauthorised purchase made by someone other than the cardholder – often either expensive or very inexpensive (less than €1) or somewhat out of character. It could also be an unauthorised fund transfer.
No matter how big or small the unrecognised transaction is, early detection is key. The sooner it’s spotted, the sooner it can be put right – and the less damage the criminal can do.
Spotting fraudulent transactions
Consumers should be encouraged to review their statements, keep an eye out for any activity they don’t recognise and report anything that doesn’t look right. Banks can make this easier by developing mobile app functionality that allows customers to monitor spending and pushes customised alerts for purchases made over a certain threshold.
Banks can also embrace rapid advances in AI and machine learning to detect suspicious or out-of-character purchases automatically. By using predictive analytics and outlier models, banks can flag transactions and either block them automatically or reach out to customers for confirmation.
Adding extra security layers
While spotting fraud early is key, prevention is even better. Banks can protect themselves and their customers by adding extra security layers into their processes.
Putting things right
Technology has enabled more sophisticated security measures, but it’s also enabled more sophisticated scams. This inevitably means criminals will prevail at times. It’s vital, then, for banks to have robust processes to support customers who’ve been targeted.
Digitising front-line support, for example, makes it quicker and easier for customers to contact banks when something’s gone wrong – while also driving operational efficiencies and cost savings.
Protect yourself and your business from digital scammers
Fraud and security breaches don’t just hurt your customers, they can also cost your business in the form of fines and reputational damage. To see how Engage Hub can help keep you and your customers safe, get in touch.