24 Feb Fraud Detection & Machine Learning – Everything You Need to Know
Cyber security has never been more important than it is right now. With the majority of shopping taking place online, it can be hard to know whether or not your sensitive credit card and bank account information are truly safe.
With today’s technology constantly improving and creating innovative solutions, there are fraud detection software programs capable of ensuring user data is protected while preventing fraudulent financial transactions.
Many of these solutions use something called machine learning to update and improve on their own.
If these terms are making your head spin, you’re not alone. Let’s get to the bottom of what fraud detection and machine learning actually are and what they mean for the future of online security.
What Is Fraud Detection?
In today’s world, most, if not all, of our information is stored on the internet. And though we like to believe that our information and sensitive data are protected, often it’s easy for someone to steal it.
Fraud detection is a set of processes and analyses that are designed to detect and prevent fraud.
These processes allow companies to identify any unauthorized financial transactions, cyber hackings, scams, and more.
It’s essential for e-commerce companies, in particular, to have some sort of fraud detection protocol or else they risk the loss of profits and the trust of their customers should the worst happen.
What Is Machine Learning?
The term “machine learning” is used to describe software that uses analysis, algorithms, and history to get better at functioning over time.
The software is able to automatically improve itself and the way it works the more it is used, taking into account all data that it processes to create a better user experience and optimize functionality.
Essentially, it intuitively adjusts itself to do its job better.
How Machine Learning Can Be Used in Fraud Detection
So what do these two things have in common?
Machine learning is often used in the most cutting-edge fraud detection software available to businesses today.
It combines the ability to detect and prevent fraud with the ability to improve its approach at the same time. This means that it’s able to deliver custom results that change and grow as your business does, filling in weak spots and strengthening security protocols the more it learns from how customers interact with your site.
Machine Learning and Fraud Detection: A Case Study
Perhaps the best way to truly understand what machine learning combined with fraud detection can do for a website is to look at the proven results already out there.
A great example of how successful fraud detection software that implements machine learning is the case of how Riskified was able to take popular athletic clothing and shoe company Finish Line to the next level.
Though declining truly fraudulent transactions is important for online security, not declining good transactions and turning away possible customers is possibly just as important. Keeping this in mind and creating an automated, scalable, and custom fraud detection solution focused on decreasing false decline rates, Riskified was able to see incredible results.
Finish Line was able to see a 4% increase in approval rate and a 70% decrease in chargebacks, with the 100% automation that was achieved leaving the company free to focus on providing stellar customer service while saving money on the cost of manually checking this data.
This success is due to the machine learning aspect of Riskified’s fraud detection software, outlining just how powerful machine learning can be for businesses that need to protect data and profits.
Fraud Detection Software with Machine Learning Capabilities
To combat user and employee data from being stolen and prevent fraudulent activity that could cost your website thousands, many fraud detection services have popped up, promising a more secure site.
The best way for a fraud detection software company to accurately protect your data as your company grows and evolves is to use machine learning. This eliminates the risk of human error and cut down on time spent checking up on security.
When it comes to companies offering machine learning fraud detection software, our personal favorite has to be Riskified. They’ve provided automated smart solutions to protect user data and prevent fraud to huge online retailers including Wish, Wayfair, Tickemaster, and many more.