AI-Powered Fraud, First-Party Fraud, and Data Consortiums: Around the Fraud Prevention Water Cooler

Fraud prevention, and the discussions surrounding it, are always evolving. While 2024 has been no exception, a few specific topics have taken over the fraud prevention discussion:

1. The sharp rise in sophisticated new fraud attacks powered by cutting-edge AI technology
2. The proliferation of first-party fraud and evolving friendly fraud methods
3. Data consortiums and how to utilize data signals to detect more fraud.

Our upcoming DEFEND webinar will feature industry experts from DataVisor, DCI, Nymbus, and Galileo as they delve into discussing each of these topics in detail while revisiting the latest trends and strategies.

To get you ready for the conversation, this blog post will glance at those three key topics and see where the conversation rests right now.

AI-driven fraud—where does it go from here?

Artificial intelligence has been a double-edged sword in the fight against fraud. While it has provided financial institutions (FIs) with advanced tools for detecting and preventing fraudulent activities, it has also equipped fraudsters with sophisticated means to perpetrate their schemes. AI-driven fraud attacks come in various forms, from deepfakes and bot attacks to synthetic identities and automated phishing scams. As AI technologies evolve, so do the tactics of fraudsters.

To stay ahead, FIs must leverage AI to predict and counteract these threats proactively. Machine learning models that analyze transaction patterns, behavioral biometrics, and real-time data streams are essential tools in this fight. Likewise, Generative AI plays a crucial role in lightening a fraud team’s load by automating tasks like manual reviews and rule tuning so they can focus more of their time on preventing fraud attacks.

While fraud teams can fight fire with fire when it comes to AI-driven fraud, where will fraudsters’ tactics go from here? How will they evolve and improve? How can fraud teams stay ahead and proactively prevent damaging AI frauds? Our webinar panel will tackle those questions by sharing the experiences they’ve had both fighting AI-driven fraud as well as building and leveraging leading AI-powered fraud solutions.

Rising first-party fraud and how to fight it

First-party fraud, where the perpetrator is or appears to be a legitimate customer of an FI, has been on the rise. An October 2023 survey from Socure found that 35% of Americans admitted to some form of first-party fraud. This includes activities like chargeback fraud and wardrobing, as well as more serious frauds like loan stacking and fake account openings. These fraud vectors pose a unique challenge in detection because they appear like genuine customer behaviors. Even when fraudsters are taking control of good user accounts, the same problem of identifying that a fraud has taken place persists.

Combating first-party fraud requires a multifaceted approach and a customer-centric strategy. Enhanced customer due diligence, robust identity verification processes, and leveraging advanced analytics to detect anomalies are crucial to have in your strategy.

During the webinar, our panel will dive even deeper into prevention methods, including those they’ve seen prove most effective and the technologies and strategies that lie on the horizon to combat first-party fraud.

Are data consortiums the key to better fraud prevention?

Data consortiums, where multiple FIs share anonymized fraud data, have emerged as a powerful tool in the fight against fraud. By pooling resources and information, these consortiums can provide a more comprehensive view of emerging threats and suspicious activities. This collaborative approach allows FIs to identify patterns and trends that might be missed when analyzing data in isolation.

The data consortium approach is also a sign that FIs are gaining a greater understanding of the power of data in the fight against fraud. More data, more signals, more insight into evolving fraud patterns and attack types can only benefit fraud teams. That is, of course, as long as they know how to leverage that data and apply it in the right ways.

During the webinar, our expert panel will discuss how to best utilize consortium data and data signals to enhance fraud prevention efforts. They will also cover the benefits and challenges of participating in data consortiums and how to navigate the regulatory and privacy concerns associated with data sharing.

Hear the discussion in our DEFEND webinar

These are just a few of the critical topics covered in the DEFEND Webinar Mid-Year Review: Strategies Against Emerging Fraud Threats. The panel of industry experts provided deeper insights and more comprehensive strategies sure to help your organization identify emerging fraud threats and future-proof your fraud strategies.

Watch the DEFEND Webinar any time on demand and stay ahead of the curve in the ever-evolving fraud prevention landscape.