When it comes to catching identity fraud, often it’s like finding a needle in a haystack. That’s because many businesses treat all applications and transactions as if they could be fraud. But the reality is that majority of those transactions are made by good customers. The challenge with fraud is that many organizations lack enough true fraud cases to develop reliable, robust fraud models. As a result, all customers, including the good ones, are often subjected to a cumbersome identity verification and authentication process, leading to a terrible customer experience.

This is why at Enova Decisions, we focus on helping clients model normal behavior, leveraging both 1st & 3rd-party data. Since majority of transactions are not going to be fraudulent, it’s much easier to establish a baseline of what is normal and therefore makes it much easier to identify when behavior is abnormal. An example of how to model normal behavior is looking at velocity. For example, if on average, 30% of new customers apply with a Gmail email address and one morning, that percentage jumps up to 80%, that may be an indication that your business was victim of a fraud attack, and the applications with a Gmail email address can be isolated for further review.

While abnormal behavior may not necessarily be fraudulent, this information can be used to isolate cases where additional verification and review is necessary. In other words, by scoring transactions on abnormality, businesses have a roadmap toward auto-approving clear cases of normal behavior and auto-flagging abnormal behavior for additional review. So, rather than applying the same level of friction across the board, friction is added only when necessary. Therefore, an efficient and effective fraud detection and prevention program is not necessarily one that is completely automated. Rather, it is one that enables you to automatically identify clear cases of non-fraudulent and fraudulent transactions so that your investigations team can focus their time reviewing the unclear cases.

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