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What Is Fraud Prevention? Here’s What You Need to Know

What is fraud prevention?

What do acquiring banks, sponsor banks, and/or payment processors need to know about fraud prevention? We’ll cover what fraud prevention is, what payments fraud is, and how LegitScript Merchant Onboarding and Merchant Monitoring fit within your fraud risk management programs framework. Then contact us for a quick strategy session.

What Is Fraud Prevention?

Fraud is a broad category that encompasses many types of illicit activity. As such, fraud detection and prevention is an umbrella term that comprises a multitude of solutions and software products. Simply put, fraud prevention is a process, policy, function, or strategy a business enacts to protect its consumers and brand reputation from fraudulent activity. The fraud prevention and detection market largely comprises fraud solutions that help with risk and compliance, governance, fraud analytics, consumer protection, and more.

Fraud protection is big business. In 2017, the fraud detection and prevention market was worth $19.5 billion. In 2023, it exceeded $27 billion, and is projected to increase to more than $66 billion by 2028.

What Is Payments Fraud?

Payments fraud involves deception around a payments transaction and can be perpetrated by anyone involved in the transaction against anyone involved in the transaction. It is challenging to catch unless there is a holistic fraud risk management program in place with fraud prevention processes, policies, functions, and/or strategies.

Consumer fraud, a type of payments fraud, “[o]ccurs when someone intentionally uses false or stolen payment information to make a purchase.” Examples of common types of consumer payments fraud include but are not limited to credit card fraud, account takeover (ATO) fraud, and friendly fraud. Payments fraud also includes merchant fraud, in which merchants misrepresent their businesses or their offerings to circumvent policies and card brand rules, or to swindle customers. The most egregious example is transaction laundering.

Sponsor banks, acquiring banks, and payment service providers should be aware of the risks associated with onboarding and maintaining merchants, and mitigate those risks with a monitoring and reporting solution like LegitScript Merchant Monitoring and Onboarding.

LegitScript Merchant Monitoring Alerts You of Fraud in Your Payments Ecosystem

Are you an acquiring bank, sponsoring bank, and/or payment processor looking for merchant-level insights into your downstream or merchant portfolio? LegitScript Merchant Monitoring and Onboarding helps you prevent merchant fraud at all parts of the merchant lifecycle. We assist with onboarding merchants and consistently, persistently monitoring them once they’ve entered your payment ecosystem.

Contact us for a quick strategy session.

Smelting words into subject matter expertise since 2020, Thea Le Fevre specializes in B2B SaaS Content Marketing. She believes in embracing innovation and produces AI-assisted content along with organically crafted content. Take a deep dive into her work for up-to-date industry news surrounding issues in trust & safety, payments risk & compliance, healthcare, and more.

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