As fraudulent activities surge in India, a recent study commissioned by Experian, a leading global information services provider, and conducted by Forrester Consulting sheds light on the escalating threat landscape. The study reveals alarming statistics, indicating that 64% of respondents have witnessed a rise in fraud losses over the past year. Furthermore, a significant majority, comprising 67% of businesses, are grappling with the challenges posed by the swiftly evolving fraud landscape.
In response to these pressing concerns, businesses are increasingly turning to cutting-edge technologies such as Artificial Intelligence (AI) and Machine Learning (ML) to bolster their fraud prevention measures. These advanced solutions offer the capability to swiftly analyze extensive datasets, detect anomalies, and unveil fraudulent patterns, thereby empowering businesses to proactively safeguard their assets and uphold the integrity of financial ecosystems.
Financial Services Bear the Brunt
Financial services organizations are bearing the brunt of the surge in fraud losses, as reported by nearly two-thirds of respondents. Several factors are attributed to this rise, including economic pressures on consumers, data breaches leaking sensitive information onto the dark web, and the accessibility of Generative AI, which has lowered the technical barriers to conducting fraud.
Identifying Emerging Fraud Trends
The study identifies a notable surge in various categories of fraud attacks, with synthetic identity attacks leading the charge, particularly in the financial services sector. This is closely followed by identity theft attacks and account takeover attacks. In the eCommerce sector, friendly fraud attacks, where customers dispute legitimate charges, have seen a significant uptick, posing substantial challenges for merchants.
Overcoming Fraud Prevention Hurdles
Businesses face significant hurdles in their efforts to combat fraud, with the lack of device fingerprinting for fraud identification and increasing referrals causing delays and escalating costs. Recognizing the urgency of the situation, businesses emphasize the critical role of device data in passive customer screening.
AI/ML: Shaping the Future of Fraud Prevention
The study underscores the pivotal role of AI/ML-powered solutions in shaping the future of fraud prevention. Businesses cite increased acceptance rates, reduced losses through greater fraud detection accuracy, and a decrease in manual reviews and false positives as the main benefits of adopting ML fraud solutions.
The Imperative of Continual Adaptation
Continual automatic model retraining emerges as a crucial factor in AI/ML-based fraud prevention, with businesses acknowledging the need to stay abreast of evolving fraud threats. This capability becomes even more critical as Generative AI heightens the risk of fraud, necessitating rapid responses to changing fraud patterns.
Manish Jain, Country Managing Director at Experian India, emphasizes the pivotal role of AI in addressing the evolving landscape of fraud. He highlights AI’s agility in adapting to dynamic threats, actively defending against ever-changing risks, and ensuring consumer protection while safeguarding businesses from significant financial losses.
Experian’s comprehensive study, based on insights gathered from 308 fraud managers across ten countries in the EMEA and APAC regions, underscores the urgent need for businesses to embrace AI/ML strategies in their fraud prevention arsenal. By leveraging the power of advanced technologies, businesses can fortify their security measures, mitigate risks, and foster a resilient credit ecosystem in the face of escalating fraudulent activities.
