Fraud is a big topic, and a cornerstone of financial crime. It affects companies, too, costing billions for many industries each year. Yet it’s also true that from time to time, anti-fraud measures can be put in place to stop this dead in its tracks, to identify users engaging in fraud or misuse against your company, and more. Of course, internal fraud like embezzlement is more of a criminal matter that should be escalated to the authorities should you suspect it, a topic far from the remit of this article.
But customer fraud, while not necessarily criminal, is an important outcome to prevent so your company doesn’t lose its funding. For instance, stopping a customer from creating many free accounts to abuse your free trial grace period, most often through mobile device fingerprinting, can be worthwhile.
In this post, we’ll discuss four surefire tips for preventing customer fraud and how you can achieve that. Without further ado, please consider some of the following tips – and if you have insight into this matter, please, volunteer your own!
Verifying Contact Numbers & Addresses
To do business with your site, such as purchasing a product, signing up for an account, or utilizing a premium subscription, you may ask for some identifying information or at least personal data. Hence, the chances of a false or fake account are limited. It costs money to register a phone number, so this cannot be done on mass by bots, or at least not quickly.
Verifying contact numbers through an authenticating code sent via SMS can be an excellent way to start this. Address verification is a different matter. While it’s true that you might ask for a utility bill or another proof of address to conduct further transactions with a particular client, this is mainly used for credit applications or banks, not businesses. This may, instead, cause your customers to look elsewhere for the products or services they need. A good workaround for this, however, is the following:
Maximum Accounts Per Household
If you only offer a certain number of accounts per household, you can limit how many times an address can be abused. Let’s say you allow five accounts per household, with further allocations granted as per a reasoned requirement with address verification. This can be an excellent way to counterbalance the chance of fraud, or at least limit how much fraud can occur under false or repeated customer accounts.
On top of this, you might be able to use address verifications to subvert the relative ease with which emails and phone numbers are used on online accounts. So, for example, if you see that you have three user accounts all registered to the same address, all registering refunds for items they’ve received or abusing your goodwill ‘we’ll refund you if you’re not happy, and you can keep the product’ deal that many newcomer businesses offer, you can quickly ban the accounts or at least submit an essential warning and limit any further abuse of your systems.
Just like allowing a certain number of accounts per address on file with your company, you may limit how many funds can be used on a single device or how many devices a single account can be used on.
This way, you can stop a singular person on an iPhone, such as with the aforementioned mobile device fingerprinting, constantly making accounts to redeem free trials, get discounts that shouldn’t be available to them, or request refunds over and over. On top of that, you can see through support requests such as claiming that packages didn’t arrive or were damaged on the way there.
Proof Of Banking Information
In some cases, proof of banking information can be an excellent way to ensure the card being used to pay for goods and services is verified, particularly if you feel that there’s a chance they’re not being used in the right way.
Amazon, for example, has been known to commonly lock user accounts if they detect suspicious activity, like large orders being made from a different location via a customer account. To unlock the bill, they require a banking statement or particular proof of the transaction. This can be a last resort for your firm, but it can quickly help you verify a specific customer and make sure they know their information has been used in this way to buy certain goods.
With this advice, you’re sure to prevent customer account fraud going forward.