According to a study conducted by Forrester Consulting, commissioned by Experian, a global information services provider, India has recently experienced an upswing in fraudulent activities. The study has revealed that 64% of the respondents acknowledged experiencing an increase in fraud losses over the past year. Seemingly, 67% of these respondents are currently grappling with the challenges of keeping pace with the landscape of fraud threats.
According to an official release, the future of fraud prevention lies in the realm of artificial intelligence (AI) and machine learning (ML) technologies. From what it’s understood, the findings revealed that year-on-year fraud losses increased for nearly two-thirds (64%) of respondents, with financial services organisations reporting the biggest increase in losses. It’s believed that factors driving this surge in fraud attacks include financial pressure on consumers, data breaches leaking sensitive information onto the dark web, and the arrival of publicly accessible Generative AI, which is understood to have lowered the technical skills required to conduct fraud. Reportedly, the volume of fraud attacks has gone up in almost every category, which include synthetic identity attacks being on the rise, particularly in the financial services sector. Furthermore, this is believed to be followed by identity theft attacks and account takeover attacks. In the e-commerce sector, friendly fraud attacks are understood to have grown the most for merchants, followed by synthetic identity attacks.
As per the study, the biggest challenge limiting businesses’ ability to prevent fraud is a lack of device fingerprinting for fraud identification (62%), followed by an increasing number of referrals, causing increased delays and costs (56%). Reportedly, the top fraud-related priority has been improving the explainability of ML models (65%). Nearly two-thirds (67%) of businesses believe that the future of fraud prevention will be driven by AI/ML-powered solutions, as 73% of businesses find that false positives cost their business more than fraud losses. The research has shown that the most crucial factor when considering AI/ML-based fraud prevention, for 88% of respondents, is continual automatic model retraining to stay at pace with a fraud threat.
“I believe the rise of advanced technology can transform fraud dynamics, challenging established securities, and breaking down barriers. Addressing this challenge seems to require a solution – Artificial Intelligence (AI). Unlike traditional methods, AI can excel in adaptation and real-time analysis, defending against ever-changing threats. Unlocking the power of data and machine learning, AI can become a custodian at digital gateways, ensuring consumer protection and preventing losses for businesses. It can play a role in fortifying security, protecting businesses from financial risks, and building a robust credit ecosystem.” Manish Jain, country managing director, Experian India, said.
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