Online fraud is growing at a frightening pace. Many cybercriminals believe they can con eCommerce stores out of their cash and never be caught because they are operating over the internet. One particular scam called fraudulent Buy Online Return In-Store (BORIS) is thought to have cost retailers a staggering $1.6 billion last year.
However, new advances in AI are changing this situation. Here’s how AI is being used to prevent online fraud from happening in the first place.
One of the most significant recent changes in fraud prevention is the rise of fraud teams. These are groups of specialists who understand how to use AI to track down and prevent potential security breaches. This dedicated squad operates entirely in the online world, building algorithms that make online purchases safe and limited the losses that can come through fraud. This is one of the reasons that global companies are projected to spend $46.3 billion on AI for cybersecurity in 2027.
It’s not just about preventing losses, though. Investing in AI is a way to radically increase the profits of a retailer by building trust and loyalty from customers. Around a third of all purchases are now made online and this number is only growing. Retailers are putting less money into preventing physical thefts and more into building AI to act as a shield around online purchases.
Every time a customer makes a purchase – and even long before they do – fraud teams are collecting data. They’re building up a picture of their customer base to see where the threats lie. This data is then analyzed and used to create better and better AI for detecting and stopping fraud before it can happen. In addition to stopping fraud against the company itself, AI will stop identity fraud as well.
As soon as a person visits a website, the data collected on them can determine the likelihood that they might be acting maliciously. Without any human intervention needed, AI defense technology can then block this person from making a purchase. The tech isn’t perfect yet but it signals a huge step forward in the fight against online fraud.
Fraud is most commonly committed against online stores and eCommerce businesses. This is where people are regularly putting in their payment information, meaning that there is plenty of money passing through these platforms. That’s money that hackers would gladly like to take a share of. However, this is becoming increasingly difficult.
Fraud teams using big data analysis are now able to consistently upgrade payment gateways. Every time they do, hackers have to relearn how the system works. You can even now get a free eCommerce website with integrated payment gateway that will have all the security sorted for you. This has made fraud detection easier than ever before.
Advances in AI are changing the way we shop online. These algorithms are becoming better than humans at spotting and preventing fraudulent activity before it ever takes place. This will save retailers millions of dollars each year, which are savings that can be passed onto the customers in the form of cheaper products. That makes it a win for everyone involved and a good reason to keep supporting big data and AI.