In the online world, sadly, nobody is safe from online attacks, and that’s the reason why businesses need to team up to fight them; it can come any day.
Financial fraud can occur in different forms, from wire transfers to corporate credit cards, employee theft, and much more.
That’s why you need to stay protected, and in this article, we’ll dive deeper into learning more about how you can do so.
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Strong internal control
Internal fraud is on the rise and you’d be surprised that statistics show that 75% of employees have claimed to have stolen at least once from their employer. Strong internal control can be implemented only by following these practices:
- Implementing multi-factor authentication (MFA): Requiring multiple forms of verification (e.g., passwords + SMS verification, etc.) to access sensitive systems or information.
- Restricting access to certain users: Making sure employees only have access to the essential data that is necessary for their roles and no more than that.
- Monitoring real-time transactions: Using fraud detection tools to flag any suspicious activities that might include unexpected transactions, multiple failed login attempts, or logins from different locations.
- Secure payment processes: Using tokenization, encryption, and verified payment gateways to protect sensitive financial data. Ensure compliance with PCI-DSS for secure transactions.
Other than that, you need to build a trustworthy team and always encourage employees to report any suspicious activities through a secure and anonymous reporting system.
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Use fraud prevention tools
Fraud prevention tools are an excellent way to monitor fraud closely. They use a combination of AI, machine learning (ML), automation, and real-time monitoring to detect and prevent fraudulent activities before they can cause any harm to businesses.
Let’s take a closer look at how fraud prevention companies like SEON protect your business from financial attacks:
- AI/ML-based fraud detection: Fraud detection tools analyze large amounts of transaction data to detect suspicious patterns. AI learns from past fraud cases and improves over time to identify new fraudulent tactics.
- Real-time transaction monitoring: Fraud detection tools continuously monitor transactions and look for red flags like unusual spending patterns, transactions from high-risk locations, and multiple failed login or payment attempts.
- ID verification & authentication: They verify user identities by using government-issued ID scans, facial recognition, and biometric authentication, which helps prevent ID fraud and fake account creation.
- Device fingerprinting & behavioral analysis: Measure how a user interacts with a website (e.g., typing speed, mouse movements, etc.); and if behavior seems unusual, the system triggers additional verification.
Fraud prevention tools analyze behavior, transactions, ID verification, and real-time data to stop fraud before it occurs. The best approach is a multi-layered strategy, combining multiple tools to protect against various fraud types.
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Train and inform employees regarding fraud prevention
Employee training is an important part of fraud prevention. Even the most advanced security systems can fail if employees are unaware of fraud risks and how to prevent them.
There are many different approaches that you can take to effectively train and educate your employees on fraud. Let’s take a closer look at which ones they are:
- Identifying common fraud types: Includes phishing & email scams, business email compromises (BEC), account takeover fraud, and payment fraud.
- Teach employees how to identify fraudulent activity: Train employees to spot red flags on urgent or unexpected financial requests, unusual login locations or activity in company accounts, emails with slight spelling differences in domains, and requests for sensitive information.
- Enforce strong cybersecurity practices: Make sure employees know about multi-factor authentication (MFA), secure Wi-Fi connections, password management, and avoid clicking on suspicious links & attachments from any unknown senders.
- Use role-based training: Each employee has a different role, and all of them need to be aware of different levels of fraud awareness. Executive & financial teams should focus more on BEC scams, invoice fraud, and wire transfer risks. Customer support & sales need to be trained on ID verification and social engineering threats, and IT & security teams should provide advanced training on cyber threats and mitigation techniques.
Training employees is an effective way to prevent fraud. Combining awareness, role-specific training, and hands-on exercises will make sure that your business is always prepared for any type of fraudulent attack.
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Implement secure payment processing systems
A secure payment system (SPS) is a type of payment infrastructure that protects your business from any unauthorized access from fraudsters, especially in the ecommerce industry. This can be achieved through many different approaches, but first, let’s take a closer look at how secure payment systems work.
Encryption
Data encryption transforms sensitive information into unreadable codes in order to make sure that even if the information is hacked, it still can’t be used. Whenever customers make payments online, data is encrypted before their sensitive information is sent to the payment network.
The only time someone could actually access the information is if they had the decryption key, but this is a rare case scenario. Two different types of encryptions exist:
- Asymmetric encryption: Different keys are used for decryption and encryption, a public key for the private and another for the former one for the latter. While some may see this type of encryption as slower, the whole idea is that you’re still more secure.
- Symmetric encryption: Data is encrypted and decrypted using the same key, which is less secure but improves efficiency.
Tokenization
Tokenization is a security measure in payment processing that helps protect sensitive payment data from fraud. It replaces real cardholder data with a unique, randomly generated token that has no meaningful value outside the specific transaction or payment system.
Instead of storing or transmitting raw card details, the system replaces the sensitive data with a token. The token is passed between merchants, payment processors, and banks to facilitate the transaction.
Multi-factor authentication (MFA)
MFA is a security mechanism that requires users to verify their identity using multiple factors before accessing a system or completing a transaction. It’s a crucial layer of defense against payment fraud, reducing the risk of unauthorized access to sensitive financial data.
MFA requires users to authenticate their identity using at least two of the following factors:
- Something you know: Passwords, PINs, or security questions.
- Something you have: A mobile device, smart card, or security token.
- Something you are: Biometrics such as fingerprint scans, facial recognition, or retina scans.
A customer who is required to complete an online payment is required to enter a password and a one-time code (OTP) that needs to be sent to their phone (something they have).
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Use dynamic friction
Dynamic friction is a security strategy that adjusts the level of authentication and verification based on the risk level of a transaction. It helps prevent fraud by applying additional security checks only when necessary, promoting a seamless experience for legitimate users while blocking suspicious activities.
- Low-Risk Transactions (Minimal Friction): Returning customers using a familiar device might only need a password or bitometric authentication.
- Medium-Risk Transactions (Moderate Friction): A login from a new device may trigger an OTP (one-time password) via SMS or email.
- High-Risk Transactions (Maximum Friction): Suspicious activity, such as a sudden large transaction from a different country, may require MFA or manual review.
Key technologies behind dynamic friction are:
- AI & Machine Learning (ML): Detects anomalies in real-time by analyzing user behavior, location, and device fingerprinting.
- Behavioral Biometrics: Tracks how users type, scroll, and interact with a website to differentiate between legitimate users and bots.
- Risk-Based Authentication (RBA): Adjusts authentication levels based on transaction risk scores.
- Device & IP reputation analysis: Flags logins or payments from known fraudulent sources.
Dynamic friction is an intelligent fraud prevention approach that ensures security without frustrating legitimate users.
By leveraging real-time risk analysis and adaptive security measures, businesses can improve fraud protection while maintaining a smooth user experience.
Financial fraud is a threat to all businesses
Yes, it couldn’t have been said better, financial fraud is a threat to all businesses, but proactive security measures can greatly reduce the risk.
By implementing key strategies such as MFA, tokenization, dynamic friction, and AI-powered fraud detection so that businesses can strengthen their defenses against cybercriminals. Additionally, regular employee training, strict access controls, and compliance with industry regulations further improve financial security.
Fraud prevention is an ongoing process that requires consistent vigilance, adaptation to emerging trends, and investment in advanced security solutions.
By remaining informed and leveraging the right tools, businesses can safeguard their financial assets, maintain customer trust, and promote long-term success in the online world.
