15 Best Fraud Management Systems to Stop Fraudulent Chargebacks
There are unique problems in running an ecommerce store over a brick-and-mortar store. Ecommerce stores are more susceptible to payment fraud and chargeback fraud. That’s why, you need fraud management, fraud detection, and prevention systems for your online store.
You’ll want to choose the best fraud management system. But, make sure it doesn’t add to your checkout abandonment problems and can maintain your checkout conversion rate. Keep reading to learn which fraud management system is best for you.
How to choose the right fraud detection software
Protecting against fraud means finding a solution that addresses the problems you face. In addition, you need to have a minimal negative impact on your revenue. Having genuine customers blocked is the biggest revenue killer on your ecommerce store. As a result, you need to balance protection against fraud with the need to approve more orders.
When comparing tools, there are a number of things to consider. While not all will impact your business equally, you should factor each of these into your decision-making process. Below are some of the main features any fraud management system will have:
Level of automation and control
A main thing to consider is how hands-on you want to be with your fraud management system. You may want a tool that runs in the background that you don’t need to manage yourself. Some of you may want to have complete control. Therefore, you should know where your needs lie before searching for a fraud management tool.
Weigh the level of control you want with the cost to determine if the value is there. For example, an automated tool may be more appropriate if you don’t have the time and resources to get yourself or a colleague involved.
Performance and speed
Performance and speed of your ecommerce store are key to keeping customers buying. For that reason, make sure your fraud management system doesn’t impact the performance and speed of your checkout. If the fraud system drives up your checkout load times, it will hurt your bottom line and ruin your user experience.
Fraud detection is a complicated process. Avivah Litan, a fraud analyst from Gartner Group, proposed a five-layer approach to detecting and preventing fraud. Each level addresses a specific type of protection:
- Endpoint-centric: Includes data related to how the customer virtually connects with your online store such as user authentication, device identification, and geolocation.
- Navigation-centric: Includes customer behavior based on navigation through the system, such as how fast they progress and where they click.
- Channel-centric: Includes account behavior relative to the channel you are using, identifying anomalies in behavior.
- Cross-channel-centric: Includes behavior across channels, and monitors the behavior of an entity across the various channels customers use to buy.
- Entity link analysis: Involves analyzing an entity and their connection to previous and various user accounts and transactions to authenticate them.
A strong fraud management system will offer protection that addresses all of the above, which operates from a modern understanding of the types of ecommerce fraud and their impact.
Ease of deployment and integration
It’s important to consider how time-consuming, and/or costly deploying the fraud management system will be. Setting up, maintaining, and continually updating the system will be a major part of managing the tool. Having a system that is easy to set up, can be deployed quickly to production, and isn’t overly expensive or resource-heavy to set up is important.
What’s more, having a tool that easily integrates with other systems and can connect with a multitude of other systems is key. It ensures that the fraud management system has the functionality you require, performs to the standards you demand, and will be viable well into the future.
Security and compliance standards
Make sure the fraud management system meets the security standards your company has. Verify that they provide adequate protection for both you and your customers.
A fraud management system should also meet compliance standards, specifically the PCI DSS standard. This establishes standard guidelines for how to handle the collection, storage, and use of credit card information. Therefore you should ensure that any system you purchase is PCI compliant, and that it meets any other compliance requirements you have for your business.
Real-time alerts and notifications
Real-time alerts and notifications that bring potential fraud cases to your attention are critical. With real-time alerts, you can effectively stop fraud before getting to a point where you need to dispute the transaction. These help you limit the amount of fraud on your platform and stifle losses.
Pricing and value
There are many pricing models for fraud management software tools, including:
- subscription based,
There are more complex pricing models that involve flexible pricing based on:
- company size,
- industry size
- and more.
The pricing model that works best for you will ultimately come down to balancing your business needs with what you need from the tool.
In general, full-service fraud management systems will be more costly at face value, but they also provide customer support for the tool and your team’s use of it. While running or building your own fraud management tool may seem less costly upfront, having an in-house team that manages this tool can be costly over time.
Different fraud management tools have varying levels of customer support. Depending on how knowledgeable and proficient your team is at operating and running a fraud management tool, you may require little customer support, however, if your team is new to fraud detection and prevention systems, you may want more support from the vendor.
Be realistic and honest with yourself about the level of help you will need, as you can cause yourself added stress, work, and costs in the long run if you purchase a tool that you can’t sufficiently manage. Compare your needs, and find a tool that has adequate customer support for the level of experience you have with fraud.
AI and machine learning
Most modern fraud management systems will have an element of AI, machine learning, or self-learning. Many of these will require manual monitoring and approval, with human interaction overseeing the system. However, having a deep-learning system that automatically monitors, analyzes, and improves its fraud protection over time gives you a system that continually gets better at protecting customers and authenticating valid transactions.
Handling false positives and approving legitimate transactions
Many ecommerce retailers don’t even realize that they are losing a significant amount of conversions — and revenue — to false positive fraud indicators on legitimate transactions. This means you are actually rejecting good customers and keeping them from making purchases on your site. What even fewer retailers realize is that, in most cases, more revenue is lost to false positives than to the dollar cost of fraud loss itself.
While you want to secure your online store against fraud, you also want to approve as many legitimate transactions as possible, since you are turning away revenue by falsely rejecting orders. Some fraud systems (like Bolt) are designed with this balance in mind, and use a variety of indicators to determine whether a transaction is authentic, operating under the premise that they should be approving all authentic transactions. This helps you capture revenue you would otherwise lose to false positives in fraud detection, while still using a high-quality security system that will root out fraud and stop it in its tracks.
15 best fraud management systems
Fraud takes many forms, and in a constantly-changing ecommerce ecosystem, fraudsters continuously improve their methods, and fraud gets more difficult to manage. To help you tackle fraud, there are a number of tools available. While some of these are comprehensive tools that address various types of fraud, others focus on specific types of fraud or address certain types of fraud more acutely.
Choosing a fraud management system for your ecommerce store will involve tailoring the service to the needs of your platform. To help you find the right fraud management tool for you, we’ve sorted the tools below into categories based on what type of fraud they best protect against:
- Comprehensive fraud systems
- Payment fraud
- Chargeback fraud
- Fraud monitoring and prevention
- Risk analysis and aversion
Let’s start with the all-around great tools with multiple offerings:
Comprehensive fraud systems
Bolt combines best practices for fraud prevention with the world’s first checkout experience platform. In other words, it helps optimize checkout for an incredible shopping experience, reduces time to checkout, and maximizes store revenue. Bolt has security as its foundational principle, providing this optimization without compromising on the safety and security of your ecommerce platform and payment gateway.
Their 100% fraudulent chargeback coverage guarantee means you can rest easy and rely on their system to protect you and your customers, while capturing potentially lost revenue from falsely rejected good orders.
Kount is a complete fraud management system, handling payment fraud, new account fraud, and account takeover fraud. Their system works to reduce chargebacks and mobile fraud while at the same time increasing sales and automated order review. Their system uses device fingerprinting, machine learning, and a comprehensive rules engine to guide decisions about allowing and rejecting transactions.
Their fraud tool aims to make cybercrime more difficult while also creating less friction for authentic transactions, allowing you to capture more revenue. Their suite of fraud services includes fraud protection, web threat detection, intelligent fraud services, and adaptive authentication, all of which protects against mobile fraud, phishing scams, data breaches, and account takeovers. This fully protects your ecommerce store from fraud while enabling a seamless, frictionless checkout for users.
Payment fraud tools
Software AG uses historical and real-time data to identify fraudulent behavior. Apply, update, and refine fraud rules to your tool to consistently improve the level of fraud protection you offer. Their system also uses machine learning to steadily increase the level of protection provided. With these systems in place, you can identify potential fraud in real-time, stopping it as it occurs rather than retroactively addressing the fraud.
This solution identifies and stops payment fraud by using a combination of behavioral profiling, anomaly detection, and machine learning. By using monetary and non-monetary indicators, they can assess the risk of fraud for each transaction, approving authentic transactions and halting potential fraud. Moreover, their tool includes real-time alerts, behavior monitoring across channels, and improves its performance through machine learning.
Their fraud management system is designed under the philosophy that “complex problems require sophisticated solutions.” As a result, they combine data enrichment, a collective intelligence network, deep learning with a rules engine, case management, visual analytics, and data mining to create a complex system that addresses the multiple factors that contribute to fraud.
Sift works to proactively prevent payment fraud. Their payment fraud tool works to stop fraudsters without compromising on safety or growth. What’s more, the tool is designed to reduce manual review, automate detection and response, and provide deeper insight into fraud on your platform.
Signifyd understands that security isn’t the only thing that matters, as customers continuously demand more from the retail experience. Maximize conversions while protecting ecommerce across all channels. All of this is done without compromising the safety and security of the payment gateway. Their system will help you eliminate fraud on your ecommerce store while maximizing your revenue.
Chargeback fraud solutions
Stripe Radar is designed with credit and chargeback fraud in mind. You can update and refine system rules, choosing your risk tolerance and setting the system to manage fraud itself. In addition, you can let the system monitor, detect, and prevent fraud for you based on the settings you’ve selected. You can always adjust the rules and settings to better protect your store.
This tool helps protect ecommerce stores from fraud, specifically aimed at reducing friendly fraud and fraud losses, putting more money in your pocket. Their easy-to-use dashboard makes the information accessible and digestible for all, displaying information visually so users can easily identify anomalies and patterns.
As a leading chargeback management provider, their system is tailored to address the issue of chargebacks on your online store. They employ a proactive rather than reactive approach, aiming to root out fraud before it occurs. Their system fully manages chargebacks, from detection, to prevention, to disputes. They will even help you choose which chargebacks are worth disputing to help you effectively use your resources.
Their real-time fraud screening tool detects chargebacks, helping you stop them before requiring a dispute. Their system uses a simple ‘pass’ or ‘fail’ model, indicating whether the transaction passes the fraud protection or not. This will then automatically reject a transaction or alert your analysts of potential fraud for follow up or further verification. Overall, this method helps reduce chargeback fraud and allows you to accept authentic payments more regularly.
Riskified’s fraud management tool seeks to mitigate the risk of fraud on your ecommerce site. With a comprehensive tool that detects, prevents, and protects against fraud, they specifically address chargeback fraud. They are so confident in their ability to protect against chargebacks that they offer a guarantee on all fraud chargebacks that are allowed, so you can trust their system to protect your customers — and you as a retailer.
Fraud monitoring and prevention
Combine high-performance data analytics and machine learning to detect fraud before it happens and prevent it. Monitor not only payments, but non-monetary behavior to identify the customer and potential fraud. With an intuitive dashboard, this information is easily accessible by your team so you can draw meaningful insights.
Their tool uses machine learning to adapt and improve, detecting and preventing fraud better. They use beacons, APIs, and SDKs to generate valuable data dashboards that let you display and format information in a way to draw insights. From here, you can develop notifications and alerts to track fraud as well as automated prevention methods.
Developed by Detelix, Argoscope is their fraud detection software, using AI to give you confidence in the safety and security of the platform. They continuously monitor payment processing across the organization and supervise transactions so you can draw real-time insights that are actionable.
This fraud prevention tool uses proxy and VPN detection, email verification, device fingerprinting, and user and transaction scoring tools to identify customers and authorize payments. Their system factors in over 25 risk analysis data points to give a fraud score to each transaction in real-time. This lets you easily detect and prevent fraud before it happens.
Catered to enterprise level needs, Clari5 is a big data solution that provides real-time insights that lead to meaningful improvements. It monitors, tracks, and identifies suspicious activity and helps guide decision-making and makes automated decisions. As a result, it meets all compliance needs, and ensures a safe checkout for customers.
Risk analysis and aversion
AgenaRisk works closely with ecommerce platforms to offer consultation services. They build models, validate and implement plans, and prototype fraud systems. For example, they use a flexible approach allowing them to adjust quickly and adequately to address fraud problems. What’s more, their customized solutions can be designed to fit your fraud needs and address the risk your ecommerce store faces.
Endorsed by the American Bankers Association, this fraud management tool guards against fraudulent activity for businesses of all sizes. Their Next Generation Technology reduces fraud while permitting authentic charges, reducing revenue lost to false positive indicators of fraud. Their tool has exceptional customer service, supporting your team with effectively using the tool to mitigate the risk of fraud.
Top benefits of fraud management
Some of the advantages of using a fraud management system — such as security, safety, and protection — are self-explanatory. These are the cornerstone of any anti fraud system, but there is more to it than just detecting fraud. Here is a list of the core benefits of using a fraud management system for your ecommerce platform:
- Automated transaction screening and review: Transactions are screened and reviewed with an automated system, catching fraud behavior and saving time for your analysts.
- Real-time tracking, reporting, and alerts: Real-time fraud data analytics, monitoring, and reporting means you can get alerts and notifications when fraudulent activity is detected on your platform. This lets you act in the moment to stop fraud in its tracks.
- Deep insights about customer behavior: Analytics on user behavior, such as where they tap/click on a screen, where they access the ecommerce store from, and IP addresses all help identify the user and validate whether they are a genuine shopper or a fraudster.
- Reducing false positives: Properly managing fraud means that you are able to approve transactions that could otherwise be falsely rejected. This means you approve more transactions and capture more revenue.
To get a service that gives both you and customers confidence and peace of mind when shopping, as well as a smooth, appealing checkout interface, try Bolt. With a fast, single-click checkout option that launches on your product page, customers never have to leave their current page for a new page or a redirect.
Bolt believes in providing a transparent, complete service with no hidden fees or overcomplicated payment structure. In other words, you get a full-service checkout and fraud management system that doesn’t compromise on user experience. With a 100% fraudulent chargeback coverage guarantee, you can rely on them to catch fraud and capture otherwise lost revenue.
If you’re interested in getting more comprehensive tips to better help you combat ecommerce fraud and help you better navigate chargeback disputes, download our free ebook: All About Chargebacks