When it comes to protecting e-commerce businesses from fraud and other security risks, Online transaction fraud scoring (also known as risk scoring) is one of the most effective tools available. By combining cutting-edge machine learning algorithms with AI, risk score values are automatically cross-checked against preset rules and assigned to the overall transaction. Based on these rules, the fraud technology will then decide to approve or decline the purchase, flag it for manual review, or send a request for additional verification (e.g. a text with a unique code).

Online Transaction Fraud Scoring: How to Reduce Risk and Protect Your Transactions

Fraud indicators such as high-value orders, multiple purchases from new customers, and unusual shipping addresses and timestamps are all used in fraud detection algorithms. However, the best fraud protection software is able to go beyond these basic red flags and evaluates the whole picture of each individual customer’s activity. This includes things like whether the customer uses a free email provider, their ISP is associated with data centers, or their device has been used in other fraudulent transactions.

A good fraud scoring system also allows you to set up custom rules that are more specific to your business. This enables you to adjust the weight of each factor so that it better reflects your business’s tolerance for risk. This means that you can prevent fraud by focusing on the things that really matter and not wasting resources on false positives. The result is a more scalable risk mitigation system that can keep up with increasing transaction volumes without needing to increase your team’s workload.

Written by warnertv