UDM- Your Fraud Monitoring Assistant

Fraud and Scams are not one and the same, contrary to popular belief!

A scam is where the customer would be tricked into becoming a part of the activity.

But fraud is an involuntary act, where the customer has no involvement from their side

While it is almost impossible to recover the losses arising from a scam, so is not the case of fraud. With proper protocols and monitoring systems in place, it is possible to not only recover funds but also take the appropriate steps to curb future attempts.

Sounds simple enough, doesn’t it?

However, let me stop you right there, as there is a major loss of focus on some of the touchpoints that are present in a transaction’s journey. Meaning today’s fraud monitoring systems focus mostly on investigating the origination point of the transaction, aka the customer.

Now, let’s dissect this situation into the buckets of

Evidence, Analysis, Deduction, and Conclusion.

Evidence:

The customer and their transaction pattern are the only evidence we have as of today. Most solutions in the market focus on customer behavioral patterns, that’s all. The other participants of a transaction say a merchant, is often ignored.

But here’s a question,

• What if the customer is not the only person to scrutinize?
• What if we are missing/overlooking something else?
• What if the merchant and card network have a role to play as well?

Well, to answer these questions, let’s get on with the analysis part!

Analysis:

Whenever a fraud transaction is reported by the customer or found out by the bank, the analysis happens only of the following data points:

• Customer’s Identity,
• The last transacted location and
• Base/ Home location

And these data points are an automated rule that has certain thresholds to be tripped for the card blocking to occur. If the fraudster stays within the rule threshold, the transactions still go through, until the customer finds out about these transactions, reports it to their bank, and the card is blocked as a result of that report.

But what happens in the case of a BIN attack?

All the fraudster needs to do is randomly generate CVV numbers for all the credit cards mapped to that particular bin and keep pushing transactions until one or several of them go through.

Deduction:

Now that we have analyzed all that is at hand, next comes the deduction where we put the pieces together.

Along with the analysis of the customer as a data point, it is important to track the other data points as well like

• Transaction destination
• Is the recipient a merchant or wallet?
• What is the IP address of the transaction?
• Is the IP address the same or different? If same, how many transactions have originated from it?
• Has this fraud been reported to the card network’s fraud reporting system?

In reality, none of these points are taken into consideration, we only keep focusing on the customer leading to half-fulfilled actions of stopping the fraud instances.

So, the deduction leads to the missing connection point, a consistent feedback loop that will interact with the Bank’s transaction monitoring system, Fraud monitoring system, and the card network.

The Missing Connection- Unified Dispute Management (UDM)

UDM is an AI-powered dispute system that can offer this information as a feedback loop to these participants. These actions have a two-fold effect:

First-Fold Effect:

Every time a fraud dispute is raised, UDM will automatically record the details of the transaction and if the merchant is the same, they will be flagged as high-risk.

This information will be then fed to the bank’s transaction monitoring system and can be used for real-time monitoring.

Second-Fold Effect:

When raising a fraud dispute, there are two perspectives attached to it. One chargeback must be raised and the same has to be reported to the network’s fraud monitoring System.

But, given the lack of technology in this part, either of these actions do not happen and many transactions go unreported.

However, as UDM is connected at both endpoints of the network and bank, this action is now possible.

So, with UDM in the mix, it is possible to curb future instances of fraud and lower its percentage as it becomes the central feedback loop between the bank and card network.

Want to know more? Let’s talk