The rise of digitalization has created many opportunities for individuals. However, this has made it easier for people to fall prey to fraud. When you hear fraud, you instantly think about any activity that relies on deception to achieve a gain. Fraud can be defined as lying to deprive a person or organization of their money or property.
The advancement of technology makes it easy to impersonate and lie to people. With a diminishing line to determine what is real and fake, fraudsters can set up an entire scene to ensure the users believe their lies and the users fall prey to their tactics.
For instance, in a certain type of fraud trail, the taxpayers can receive a fake message asking them to confirm their bank account to claim a certain amount of tax refund.
ACFE’s Report to the Nation mentions that organizations lose 5% of their revenue to fraud each year. According to the same report, the Real Estate industry suffers the highest loss. Nearly half of the cases were due to a lack of internal controls (29%) or overriding of existing controls (20%).
Around 81% of victim organizations have modified the existing anti-fraud controls; however, isn’t it wise to improvise the anti-fraud policies to ensure that such instances don’t happen at all? Let’s discuss how organizations can detect fraud and list strategies for preparing employees to avoid scams.
Fraud Detection: How to Protect Your Organization?
Fraud detection refers to a set of policies introduced in the organization to prevent criminals from gaining advantages through pretenses. It requires a holistic setup that goes way beyond utilizing technology, such as fraud detection software, RiskOps, and risk management strategies that automatically or manually detect fraud.
Here is a list of things that a holistic fraud detection should include to provide complete protection to the company:
A dedicated fraud detection team conducts manual reviews whenever needed, while risk-based software approaches offer high degrees of automation to detect and report fraud.
A set of policies and procedures should establish risk thresholds: the amount of risk an organization can willingly take for each customer or transaction.
Employees and executives should be trained and informed so that everyone is aware of the organization’s prevailing fraud risks.
Monitoring, documentation, and reporting are important aspects of fraud detection programs in regulated industries to ensure compliance with existing statutes and internal hygiene.
The fraud prevention and detection policies should be frequently updated, and internal teams and third parties should regularly scrutinize them to ensure the protocols are compliant and working seamlessly.
Fraud Prevention Detection Strategies That Businesses Should Implement
As the fraud controls become effective, the fraudsters adopt new methods to commit crimes. For instance, fraudsters are using automated bots to impersonate businesses and employees. Besides, they are employing AI-generated identity fraud and other technologies to steal facial identities and commit the deed.
Hence, here are seven strategies that every business should implement in their operations:
Invest in Fraud Detection Software
Invest in fraud detection software that utilizes AI and ML algorithms to detect fraudulent behavior and activity in real-time. These state-of-the-art softwares sift through tons of transaction data to create user profiles to recognize usual patterns and anomalies.
Work on Placing Strong Internal Controls
Make MFA Mandatory
Upgrade to the latest identity access protocols and use Multi-Factor Authorization (MFA) to improve the log-in process. MFA adds an extra step to log in, which acts as an additional defense layer because the users will require more than a username and password to authenticate their identity.
Implement Device Intelligence Technology
Utilize Device Intelligence to analyze data collected from different points. It can then create a unique identity based on the device’s information, signals, and attributes. The illegitimate users can steal information and change the device’s settings to try to impersonate genuine users. However, Device Intelligence will identify any uncharacteristic activity and flag it as potentially fraudulent.
Train Your Employees on How to Detect and Report Frauds
Train and educate your employees about the recent business email compromise attacks and authorized push payment frauds. Employees unknowingly give away their passwords or other sensitive data and fall prey to phishing attacks. This can jeopardize the entire company’s network and lead to significant financial losses. Hence, it is best to keep them in the loop about the latest fraud tactics and educate them about detecting suspicious activity and reporting it.
Conduct Regular Audits
Conduct regular audits and reviews to get a holistic view of your business operations. However, spot or random audits should be conducted in specific areas where management is highly suspicious of fraudulent activity.
Develop an Incident Response Plan
Create a robust incident response plan so you can proceed systematically to handle different types of fraud to minimize the impact and prevent future occurrences. This means assigning responsibilities and duties so the individuals know what needs to be done and there are delays in taking strict action to stop the fraud.
Combatting Social Phishing: How Employees and Organizations Can Fight It Off?
Phishing attacks are a type of Internet piracy in which thieves are actually fishing for personal financial information to commit fraud. In a phishing attack, you will receive an email which will appear to come from a reputable organization that you do business with, like your financial institution or government organization.
The email will warn you about a serious problem or highlight an opportunity to earn monetary benefits, and it will require immediate action. You will either be asked to provide your financial information or critical information.
However, the fraudsters will use the entered information, like your account number, social security number, passwords, and other details, to loot your checking account or run up bills on credit cards. In the worst case scenario, you might become a victim of identity theft as the fraudsters will use your identity to take loans, obtain credit cards, or even create a driving license in your name.
 If you find yourself in a similar situation, here’s how you should proceed and also train your fellow employees to take the same action.
Step 1
Never provide your personal and financial information in response to an unsolicited request, whether it is through a phone call or the Internet. The emails and web pages are designed to look real and some websites may even have a fake padlock to portray that it is a secured website. Hence, if the communication isn’t initiated by you, then do not respond to it.
Step 2
If you think that a legitimate financial or governmental institution has contacted you, then talk to them by yourself to clarify or cross-check. You should search for phone numbers, websites, or email addresses on the Internet. However, the key is that you should be the one to initiate the conversation using the contact information verified by you.
Step 3
Never share your passwords over the phone or in response to an unsolicited email or Internet request.
Step 4
Review your account activity timely and report any suspicious activity to the IT team or fraud detection team in the organization.
These are some steps that employees can take on their behalf. However, as an organization, here are some strategies that you can implement to avoid such instances:
Use data analytics and machine learning algorithms to detect unauthorized account access attempts in real time, account takeovers, and fraudulent transactions.
Invest in biometric authentication tools, like fingerprints, iris scans, and voice or face detection to ensure only authorized persons can access sensitive information.
Implement a multi-faceted approach instead of relying on one single technique to detect and prevent fraud. For instance, some organizations utilize real-time monitoring with machine learning and device fingerprinting.
Ensure that any fraud detection tools you select should be easily integrated with your existing IT infrastructure.
Industry Best Practices
The only way to remain secure in this digitally connected environment is to become mentally and physically equipped to tackle such encounters appropriately. Hence, the best organizations can do is invest in fraud detection tools and educate their employees. Training the employees increases the likelihood of detecting fraud by tip, as 45% of cases were detected by tips.
Another important thing to consider is the collaboration with organizations that offer robust network security solutions to fortify your IT infrastructure with a state-of-the-art invisible shield. For instance, CelerityX’s OneX solution is a revolutionary network solution that offers lightning-fast network connectivity with negligible downtime. It comes with built-in unified threat management (UTM) to protect your location from cyber threats.
Collaboration with such organizations will allow you to focus on your core competencies with peace of mind that the safety of your critical data and customer information is in safe hands.
