Online retailers can no longer rely on simple rule-based engines to stop fraud. Utilizing AI is essential in protecting your company from modern fraud efforts.

The tactics used to commit card-not-present fraud have transformed dramatically. The solutions used by retailers in the past to detect fraud attacks aren’t as powerful because the patterns and ways of committing fraud are ever-evolving. 

Here’s the bottom line: Classical approaches to preventing fraud involving rule-based decisioning engines don’t give the level of security necessary to prevent fraud attacks effectively. Today's tactics used to commit fraud are more nuanced and require AI and ML algorithms to recognize and stop. 

What is Artificial Intelligence?

Artificial intelligence is a computer’s ability to follow the decision-making and problem-solving capabilities used by the people's mind. Numerous business sectors use Artificial Intelligence solutions to assist in improving processes. Still, the use of Artificial Intelligence for fraud prevention is a unique application of the technology that’s improved significantly over the last decade.  

With the support of Artificial Intelligence, businesses are now able to carefully trace the steps of card acceptance and detect fraudulent transactions before they’re allowed.  

Quickly Discover Behavior Anomalies

One of the common significant advantages of using AI is the capability to uncover behavior exceptions on your platform fast. For instance, the average user might log into their account, scan through your website, and waste time scrolling through the product page.

A criminal who has negotiated a user account will likely add as many things to their cart as possible within the smallest amount of time.

Furthermore, they may want to ship to an address that the account owner has never used previously. The same can be told about completing a payment method that the account owner has not before used.

AI will quickly discern this type of behavior and alert you of its existence.

Customizable Risk Thresholds

Every company has a distinct level of risk tolerance. If you are too rigid in your protection efforts, legitimate clients may find your platform challenging to use.

To elaborate, they might experience a hold on their amount even though they are the rightful owner of the account and the credit card they are using.

As you might imagine, using Artificial Intelligence with a zero-tolerance for risk will only point to a sharp interruption in your sales production. Happily, you can customize your level of risk humanity to generate the largest number of sales while minimizing the potential of fraudulent payments.

Real-Time Detection

As earlier mentioned, fighting against online fraud used to be a difficult process that required manual transaction review. More often than not, retailers wouldn't even know that fraud happened until they received a chargeback claim from the card business.

To make matters more serious, these often took six and eight weeks to dispute and resolve.

AI real-time discovery that can quickly alert you of any incidents that need your care. This enables site owners to take action as soon as feasible and prevent additional difficulties from occurring.

Minimize False Declines

It’s estimated that companies lose 3% of their income due to false declines every year. With the help of Artificial Intelligence, you can improve fraud detection efficiency and approve more legal transactions while only rejecting fraudulent ones.

Today, though, Artificial Intelligence has become notably effective at minimizing the total number of false drops that merchants incur. A fraud solution that utilizes Artificial Intelligence can precisely recognize transaction irregularities, rather than using rule-based decision engines that can often reject certain customer orders. 

Using Artificial Intelligence to Fight Fraud Can Seem Difficult

When executed correctly, AI can significantly improve your business’s ability to identify and stop fraud charges. Don’t expect rule-based fraud resolutions to keep up the evolving tactics used by systematic fraud rings.

Why Grocers Should be Wary 

There are many kinds of digital gift card scams. A popular one involves scammers telling customers that they must buy gift cards to pay debts or help a wounded loved one. Criminals also use gift card fraud bots, which abuse gift card balance checking facilities by examining myriad possible card numbers. When a equivalent is found, the balance is used to make fraudulent shopping. 

Technologies that guard credit cards can be weak or cost-prohibitive for gift cards like spotify premium gift cards, because of the various economic models. For instance, gift cards become a person’s business for a short time and aren’t supported by fees imposed on unpaid balances.

Gift card scam detection technologies don’t use a centralized clearinghouse or database like credit cards do. 

Retailers generally produce their own gift card security systems or use outside providers. 

Other technologies use algorithms to guarantee that issued gift card numbers are nonsequential, making it hard for fraudsters to guess them.

To deliver data in real-time, technologies must interface with modern CRM and POS systems. Otherwise, gift cards could be redeemed twice via various devices.

What’s Next for Food Retailers

Online and in stores, retailers are performing several tactics to deter fraud. While most don’t handle international transactions or sell large value cards, some do, and there are specific events in play when that’s the case. 

In markets, third-party gift card sales cannot pass $1,000, cards being purchased must be swiped, and clerks can’t manually enter numbers. This deters number theft from unredeemed cards, and the retailer’s front end closing checklist covers nightly gift card audits. Most gift card numbers are protected at the point of purchase by secure packaging and scratch-off codes. It’s hard to obtain cards without destroying the packaging, and some scratch-off elements have printing on them, which attaches a layer of protection.