Perhaps you have heard a new buzzword in the halls of this year’s MRC – Fraud deterrence does not mean early fraud detection, and this is confusing to some people. While there is no universally accepted definition of fraud deterrence, the concept behind it is important.
Fraud deterrence includes the proactive identification and removal of the causes and facilitators of this illegal practice. This requires analyzing conditions and procedures that may facilitate fraud, it is a forward-looking procedure and mindset, as opposed to a reactive approach. To experience the full benefits of a comprehensive fraud prevention and management strategy, your plan should include deterrence, early detection, and remediation.
Fraud is not a random occurrence, it happens when conditions are right!
With this mindset, we run analyses that can reveal possible process failures in order to enable definitive remediation. This is what part of chargeback management companies do, they review your entire process to find failures that make you vulnerable to fraud, as well as poorly managed data, vulnerabilities to internal fraud, etc.
This is not a simple job. Fraud deterrence involves both short (procedural) and long-term (cultural) initiatives. Both are vital, as ClearSale studies show that fraud varies by country and depends on specific situations.
Putting simple rules in place to prevent fraud is relatively easy. However, if you want to take your fraud deterrence to the next level with optimized chargeback and approval rates, the challenge becomes far more complex. ClearSale’s COO, Bernardo Lustosa, describes a good example of this in "Why good predictive analytics are not enough, predictive analytics is ONLY the first step to reducing fraud."