Finance & Banking , Fraud Management & Cybercrime , Fraud Risk Management

Banks Use Behavioral Analytics to Tackle First-Party Fraud

First-party fraud has shifted over the years from account holders committing credit card fraud to committing pandemic-related scams. Nowadays, account holders are fooling banks by making fake deposits and emptying the accounts of provisional funds.

See Also: The Rising Threat of Fake Business Accounts

In this evolving threat environment, financial institutions face new challenges from the increased use of synthetic identities and the difficulties in classifying first-party fraud, according to Seth Ruden, director of global advisory for the Americas at BioCatch.

With no easy way to validate fraudulent activity, banks may simply be charging off losses, Ruden said.

The industry needs to use behavioral analytics tools to tackle the problem, he said. "What we can observe is what their behavior looks like, and if somebody is pushing through a lot of applications from the same device, from the same IP address, from the same background, from the same location, making very small changes ... there's a lot of behavioral elements that can be leveraged in this capacity along with the device and the network, and that allows you to get a much clearer picture of what the individual's intent is."

In this video interview with Information Security Media Group, Ruden discussed:

• The ongoing investment by banks in tools and technologies to combat first-party fraud;
• The challenges in classifying first-party fraud;
• The importance of leveraging behavioral analysis and machine learning algorithms.

Ruden has more than 15 years of experience in financial crimes prevention and risk management. He provides advisory services to BioCatch's clients in the Americas region, helping them leverage the power of behavioral biometrics to enhance their fraud detection and prevention capabilities.