Learn how AI can be used in fraud detection & the various methods it can prevent individuals from online frauds. Read on to know how VisionERA can also blend in with the same.
Businesses are always looking for new and innovative ways to protect themselves from online fraud.
Recently, many have turned to artificial intelligence (AI) as a way to detect and prevent fraudulent activity. But what is AI, and how does it work? And more importantly, is it effective?
In this blog post, we will explore these questions and more. We will look at the benefits of using AI for this purpose, as well as the challenges involved in its implementation. We will also compare AI to other methods used for detecting online fraud, and discuss some of the future applications of this technology.
Finally, our AI experts will be offering some tips on how businesses can make sure they are not falling victim to online fraud by using AI.
According to Merchantriskcouncil, in 2022, ecommerce companies spend about 10% of their annual revenue on managing fraud. While few are genuine frauds, but there was about 47% of customers incorrectly file disputed transactions as fraud and that is a huge volume that doesn't yield to the betterment of customer experience.
Phishing / pharming, card testing, identity theft, and first-party misuse remain the most prevalent fraud attacks, each affecting more than 3 in 10 merchants globally.
60% of businesses still rely on manual ways to identify frauds and that adds to a lot of overhead/labor costs. The good news is that 12% of these companies are working toward automating their process using a combination of AI and human intervention.
AI is a branch of computer science that deals with the creation of intelligent agents, which are systems that can reason, learn, and act autonomously.
There are many different applications for AI, but one of its most promising uses is in the detection of online fraud.
Online fraud is a major problem for businesses of all sizes. In 2018, there were over 3.2 billion cyber attacks worldwide, and it is estimated that these attacks will cost businesses over $6 trillion by 2021.
One of the most common types of online fraud is known as phishing. This is where scammers send out emails or other messages that appear to be from a legitimate source, such as a bank or retailer.
The message will often contain a link that takes the user to a fake website, where they are asked to enter personal or financial information. This information is then used to commit identity theft or fraud.
Another common type of online fraud is credit card fraud. This is where scammers use stolen credit card information to make unauthorized purchases.
There are many other types of online fraud, but these are some of the most common.
Here are a few fraud prevention tools/methods that companies are currently using or adopting in near future:
There are a few different ways.
One is by looking for patterns in data that may be indicative of fraud. For example, if there is a sudden spike in credit card usage from a particular location, this could be an indication that fraud is taking place.
AI can also be used to create “virtual assistants” that can interact with users on behalf of a business. These assistants can be used to answer questions, provide customer support, or even help with sales and marketing.
In the case of online fraud, these assistants can be used to verify the identity of users before they are given access to sensitive information.
Another way AI can be used to detect online fraud is by analyzing the behavior of users. This can be done by looking at things like the time of day that a user is active, the types of devices they are using, and the geographic location they are accessing the website from.
All of these factors can be used to create a “profile” of a user. If the behavior of a user deviates from this profile, it could be an indication that they are trying to commit fraud.
Of course, AI is not perfect. There are always going to be some false positives (where legitimate activity is flagged as being suspicious) and false negatives (where fraudulent activity is not flagged as being suspicious).
There is also the challenge of keeping up with the ever-changing methods that scammers use to commit fraud. But despite these challenges, AI is still a promising tool for detecting and preventing online fraud.
There are several benefits of using AI for fraud detection.
It can help businesses save money. Fraudulent activity can cost businesses a lot of money, so anything that can be done to reduce this cost is valuable.
AI can help businesses protect their customers’ data. If a business’s customer data is stolen, it can damage the business’s reputation and cause customers to lose trust in the business.
AI can help businesses protect their own internal data. This is important because if a business’s internal data is compromised, it could lead to a loss of competitive advantage.
AI can help businesses comply with regulations. There are many laws and regulations that businesses must comply with, and these can be costly to comply with. AI can help businesses automate compliance-related tasks, which can save time and money.
Can be a valuable tool for detecting and preventing online fraud. While there are some challenges that need to be addressed, the benefits of using AI for this purpose outweigh the challenges.
There are a few challenges that need to be considered when using AI for fraud detection.
First, there is the challenge of false positives. This is where legitimate activity is flagged as being suspicious. This can lead to businesses wasting time and resources investigating activity that is not actually fraud.
Second, there is the challenge of false negatives. This is where fraudulent activity is not flagged as being suspicious. This can lead to businesses losing money because they are not aware of the fraud that is taking place.
Third, there is the challenge of keeping up with the ever-changing methods that scammers use to commit fraud. As scammers become more sophisticated, they will continue to find new ways to commit fraud. This means that businesses need to be constantly updating their AI systems to keep up with the latest scams.
Despite these challenges, AI is still a promising tool for detecting and preventing online fraud. The benefits of using AI for this purpose outweigh the challenges.
There are other methods that can be used for detecting online fraud, but AI has some advantages over these other methods.
AI can analyze a large amount of data much faster than a human can. This means that AI can be used to detect patterns of behavior that would be difficult for a human to spot.
AI is not biased. This means that AI can be used to objectively identify suspicious activity without being influenced by personal biases.
AI is constantly learning. This means that it can keep up with the latest scams and fraud-related trends.
AI is a promising tool for detecting and preventing online fraud. While there are some challenges that need to be addressed, the benefits of using AI for this purpose outweigh the challenges.
There are a few things businesses can do to make sure they are not falling victim to online fraud by using AI.
First, businesses should make sure they are using an AI system that is constantly being updated with the latest information on scams and fraud-related trends.
Second, businesses should make sure their AI system is not biased. This means that the system should be able to objectively identify suspicious activity without being influenced by personal biases.
Third, businesses should make sure their AI system is only used for fraud detection and prevention. The system should not be used for other purposes, such as marketing or customer service.
Fourth, businesses should make sure they have a system in place for investigating any suspicious activity that is flagged by the AI system. This system should include human oversight to ensure that legitimate activity is not mistakenly flagged as being fraud.
By following these guidelines, businesses can make sure they are not falling victim to online fraud by using AI.
VisionERA IDP can be an ideal solution for this problem. VisionERA is an AI-based intelligent document processing platform that is designed to crunch large amounts of data and the inbuilt reconciliation logic helps raise flags/threats when a data matching issue is identified.
You can also customize the workflow so that there is a human intervention when these kinds of flags are raised and address them immediately.
Since VisionERA is an AI tool, the analysis is totally unbiased and constantly learns from new data/learnings fed into the system.
You can reach out to one of our experts to have a no-cost consultation. Also, to send us a query use our contact us page!