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Why the best fraud-prevention data is a two-way street

Why the best fraud-prevention data is a two-way street

We’re a society obsessed with getting feedback on everything from bagels to B2B vendors because we know that more information, especially up-to-date information, helps us make better decisions. This is as true in fraud prevention as it is in any other field, perhaps even more now that large-scale data breaches and increasingly sophisticated criminal practices have made it easier for thieves to manipulate valid data to commit fraud. Here’s why online retailers who want to stop the rising tide of e-commerce fraud should look for data that’s properly contextualized and subject to regular feedback about its validity.

Three levels of data, three levels of usefulness

In general, there are three levels of data sources available to businesses for use in marketing research: demographics, fraud prevention, and other business processes. Each level has its own limits of usefulness.

At the first level, the database is a straightforward collection of a type of data point, such as names, addresses, or phone numbers. Having a data point alone is simply a snapshot in time that shows, for instance, that a particular email address existed a certain number of months ago, but not what billing address or phone number were used with that email address in a valid online transaction. In these databases data points are relatively static, free of context, and only move in one direction—from the data provider to the business client. There’s no feedback from client to provider about the validity of the data, so it’s impossible to be certain that all the data is valid.

At the second data-source level, the provider adds context for multiple related data points. 

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