Peter M.J. Gross

Peter M.J. Gross

April 19, 2022

5 Checks for Flagging Fraud Risk

Paypal’s recent discovery of 4.5 million illegitimate accounts on its platform should be a warning heeded by all: even the largest, most sophisticated payment processors can fall victim to bad actors. 

Heightened customer expectations and persistent criminal attacks have made the situation near untenable. If legitimate transactions are denied, unhappy customers may take their business elsewhere. However, lenient approval processes leave companies vulnerable to synthetic fraud and first-party fraud

These tensions have placed an increased emphasis on performing ID verification quickly and effectively. The process needs to be rapid enough to satisfy customer demands while remaining rigorous enough to protect against fraud. 

An effective ID verification process considers 5 data points: 

  • A customer’s name is their primary identifier, but it’s also the easiest to steal. The question is whether the name can be matched with other known facts to confirm a valid identity. 

  • Although a customer’s physical address is an important data point, it can change frequently. More than 10% of all US address records need to be updated each year

  • The phone number associated with a transaction is another data point that can change often — in the United States, approximately 100,000 mobile phone numbers are reassigned each day

  • The email address of a customer provides additional details for determining whether a customer request is legitimate. It can be checked to see whether it was established recently and whether it matches known email addresses.

  • An IP address also offers important clues about the validity of a transaction. If the IP address is from a region that is nowhere near a customer’s known address, then the likelihood of fraud is much higher. 

These details need to be verified against sources of truth that are accurate and up-to-date, accommodating the customer’s desire for convenience while protecting the business against fraud.

Milena Babayev, Sr. Product Marketing Manager at Ekata, a Mastercard company, says “Everyone wants to better leverage data insights — and your own, internal data, may not always be enough to predict fraud in real-time. The right identity verification solution is able to help you answer the right questions, such as when was the email first seen in digital interaction? Or is the IP address risky? Or are there any anomalies in usage of the identity elements? This is where Ekata’s digital identity verification comes in — helping businesses reduce friction and improve fraud risk analysis — resulting in a better customer experience.”

Companies can also strengthen their defenses by consulting multiple data providers for improved accuracy. Demyst’s recipe for assessing fraud risk applies sophisticated entity resolution technology to conduct thorough examinations of individual details, including IP addresses.

The Demyst platform also benefits from Ekata’s insights in other workflows, including a recipe for bad lead filtering, which can improve marketing effectiveness and make outreach efforts more efficient.

Create an account and explore hundreds of operationalized external data sources ready for testing and deployment.

Don't settle for half the story

Demyst gives you access to all of the data you need. Evaluate thousands of data attributes from hundreds of possible data connectors all pulled into your own custom-built APIs for instant data deployment.