Fraud Detection Is Advancing Quickly Thanks to AI – Here’s How
Fraud has always been a problem, but the prevalence of the internet and advanced modern technologies has made it an even bigger problem. Fortunately, those advanced modern technologies have also given us some impressive solutions. Artificial intelligence (AI) is used in multiple ways to combat fraud, and early results are promising.
The Constant Battle Against Fraud
Fraud is certainly nothing new, but the sophistication of modern technology has introduced new opportunities for fraud and equipped fraudsters with new techniques and tools they can use to get the job done quickly. Consumer protection specialists, software engineers, and other innovators are constantly battling against fraud, hoping to protect people and businesses from being unnecessarily victimized and to thwart fraudulent attempts to discourage future fraudsters from taking up the art.
The advancement of AI for fraud detection is one of the latest tools in the arsenal of people combating fraud. It happens to be extraordinary at what it does.
AI Fraud Detection
AI fraud detectionAI fraud detection can take many forms. The goal is always the same: recognize signals and events that are likely to be fraud so they can be addressed and dealt with before any real damage is done.
This could mean automatically disabling a specific account in response to the perception of a reliable signal of fraud, sending an automated alert that suspicious activity has been detected, or taking a specified action in response to apparent fraudulent activity.
There are many types of fraud that AI can help with, including:
- Credit card fraud. Stealing credit card information and using it online is nothing new. However, fraud detection can catch this type of activity much quicker.
- Fake accounts. Some people use fake accounts in an attempt to impersonate someone or hide behind a mask so they can get away with fraud. But AI fraud detection has a decent chance of catching it before it does any real damage.
- Account takeover. Account takeover fraud relies on fraudsters taking over legitimate accounts and using them for fraud. Again, AI can detect this in many cases and prevent it from harming.
- Credential stuffing. In credential stuffing, an automated program “stuffs” common usernames and passwords into your website. They all attempt to log in to an account to which they have no legitimate authorization. As you might imagine, this activity pattern is relatively easy for AI to detect.
The Benefits of AI in the Fraud Detection Space
Even though AI and fraud detection is still relatively new, there are many benefits for businesses adopting this type of technology, including:
- Near-total automation. AI fraud detection tools are designed to be almost totally autonomous. Apart from initial coding and testing (and a bit of initial setup), these tools are designed to operate entirely independently. They can carry out all their responsibilities without manual information, ultimately saving you time and headaches.
- Scalability. AI tools are as powerful as the resources given to them, making AI fraud detection incredibly scalable. The same system can help a startup with only a handful of users and an enterprise with a million or more users across the globe (and, of course, everything in between).
- Instant alerts. If your AI system detects that fraudulent activity is occurring or suspicious activity is in progress, it can provide you with an instant alert. Sometimes, it can take intervening action on its own. Other times, it will submit the flag for manual review. Either way, you’ll notice instantaneously.
- Real-time monitoring. AI is also prized for its ability to facilitate real-time monitoring. This isn’t just a new security practice nor a passive fraud mitigation tool that runs in the background. It gives you a constant stream of real-time information.
- Ongoing improvements. AI is designed to recursively self-improve. As it gains more information and experience, it has a tendency to keep getting better at what it does. Already, AI fraud detection tools are arguably superior to human beings – and in just a few years, their abilities will be much more advanced.
The Ongoing Arms Race
The ongoing arms race in fraud and fraud detection is likely to continue. As we get access to better, more advanced AI-based fraud detection tools, fraudsters are getting access to more robust, AI-based tools for evading those systems.
Fortunately, fraud detection has an early edge. Since there are so many people working on this problem, fraud detection may always have a slight edge over fraud itself. If you want to protect your accounting department, your business, or your personal information, AI fraud detection tools could be precisely what you need.
How To Report Fraud
Feel free to share this page if it was helpful. Officially, you can report fraud and any suspicious activity to the Federal Trade Commission – FTC (most important), the Office of the Inspector General, and the FBI Internet Complaint Center by using the pages below:
How To Protect Yourself More
If you want to be amongst the first to receive alerts about the most notorious scams every week, subscribe to our Scam Detector newsletter. You will receive periodic notifications from us with insightful tips. That will include how to prevent fraud and information about the newest tools you can use to fight crime.
Meanwhile, feel free to educate yourself with some other AI fraud-related articles. They are listed under this paragraph, so that you know more about online security. Last but not least, if you have any bad experiences, make sure to use the comments section below to expose other scammers.
Verify a website below
Are you just about to make a purchase online? See if the website is legit with our validator: