We live in a world where fraud and its consequences are rapidly increasing, and it is far from a victimless crime. Fraud affects real people and businesses, causing significant harm and potentially catastrophic financial suffering. Any online business, big or small, is exposed to both external and internal fraud. 

While internal fraud can often be managed effectively with smart organizational planning, tackling external frauds requires more comprehensive measures. This article will provide a deep insight into external business fraud prevention and help build up your resilience against online fraud. 

Why is online fraud prevention necessary for businesses?

Online fraud hurts both businesses and consumers. Companies not only lose money but also face additional costs to verify transaction legitimacy — costs that are often passed on to customers. That can place an unwelcome burden on consumers to prove they are not trying to commit fraud.

To avoid these consequences , businesses must be proactive to identify when a good user turns bad and look to prevent fraud before it happens. This can be done with an effective fraud prevention strategy in place, which proves crucial in reducing or even fully eliminating the loss due to fraud. 

Don’t take chances because undetected fraud can open up your business to further fraudulent challenges and significant revenue loss. 

Types of Business Fraud

Business fraud can take many forms, but generally falls into two main categories: 

Internal Fraud

• Asset misappropriation 
• Corruption
• Financial statement fraud

External Fraud 

• Account manipulation and misuse
  • Fake accounts
  • Account takeovers
  • Account sharing & subscription abuse
• Fraudulent transactions and payments
  • Payment fraud
  • Referral & promo abuse
  • Incentive abuse & collusion
• Identity and personal information fraud
  • Identity fraud
  • Spam & user abuse
• Advertising and marketing fraud
  • Ad fraud
  • Bot attacks

Both internal and external fraud can devastate digital platforms, leading to immediate financial loss, reputational damage, and a loss of user trust in the platform.  But, when it comes to business fraud prevention, internal frauds are comparatively easier to detect and prevent. 

One of the main reasons why external fraud prevention is more challenging is that the factors causing external fraud are unpredictable in nature. External attacks often involve sophisticated techniques and constantly changing manipulative tactics, making it difficult to anticipate and implement effective defense strategies in advance. This is also the reason why the process of detecting, escalating, and managing fraud becomes more time-consuming, increasing the financial impact of fraud.

To tackle external fraud, it is crucial for digital platforms to identify which users are legitimate or fraudulent by uniquely identifying each physical device on the platform. This can be effectively done using device fingerprinting.

In the next section, we will focus on external fraud and the role of device fingerprinting in business fraud prevention.

The Role of Device Fingerprinting in Business Fraud Prevention 

Device fingerprinting is an advanced business fraud prevention technique that continuously profiles the device session, returning real-time actionable risk signals. This provides a complete picture into user activity on digital platforms and highlights any potentially suspicious behavior. By using this technology, it enables your business to apply real time fraud detection by identifying the exact moment a good user turns bad - stopping fraud at its root.

It is extremely difficult to change a device fingerprint even if a fraudster attempts to scramble the fingerprint or factory reset a device to appear as a new device, making it  highly efficient for fraud prevention.

Here are a few major applications of device fingerprinting in business fraud prevention:

Fake Accounts Creation:

Identify and flag devices that are being used to create and access multiple accounts.

Account Takeover Attempts:

Detects repeated failed login attempts, unusual login locations, or simultaneous access from multiple locations to prevent unauthorized access attempts.

Payment Fraud Detection:

Identifies anomalies in device attributes during transactions such as mismatched IP addresses or unusual device locations to prevent payment fraud.

Account Sharing & Subscription Abuse:

Monitors IP addresses and user behavior patterns to flag suspicious devices to prevent excessive sharing and misuse of subscriptions.

Identity Fraud Prevention:

Detects inconsistencies in device information, such as mismatched device IDs, unusual access patterns, or discrepancies between device and user profiles, to prevent identity theft.

Other Minor Frauds Prevented by Device Fingerprinting:

• Referral & Promo Abuse
• Incentive Abuse & Collusion
• Spam & User Abuse
• Ad Fraud
• Bot Attacks

Which is the best device fingerprinting solution for business fraud prevention?

When it comes to choosing the best device fingerprinting solution, SHIELD is the top choice. SHIELD is a device-first risk AI platform that helps mobile apps and websites like Atlas, TrueMoney & Swiggy to eliminate all fraudulent activities on their platform. Our solution consists of two steps - device identification and risk intelligence; uniquely identifying every physical device on your platform and returning real-time actionable risk signals to provide a complete picture into user activity in your ecosystem.

SHIELD integrates seamlessly with any digital platform or application, enhancing your ability to combat fraud effectively. To explore how our platform can support your business in fighting fraud, please book a demo session with us.

Conclusion:

It's essential for digital organizations to have a fraud prevention plan in place -  as it is much easier to stop fraud before it happens than to recover from the losses after it has been committed.

Not only is it much easier to stop fraud before it takes place, but the cost of prevention is often significantly lower than the cost of recovery.

With the increase in online activities and transactions, having safeguards such as device fingerprinting in place as part of a wider strategy is more than simply a best practice; it’s a requirement in today's digital economy.