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A Brief Guide on Fraud Scoring

Fraud remains a major scare for online merchants across the globe and has been on the rise in recent years. Its rise has led to the quick adoption of fraud scoring by the majority of fraud protection and detection solutions like fraud scoring.

But what precisely does the fraud score measure, and how does it work?

This article explains the basics of fraud scoring and how to use it to increase your business efficiency.


What is Fraud Scoring?

Fraud Scoring is identifying fraudsters with the aid of Fraud Score while conducting online transactions.

A fraud score is a metric that allows you to assess the risk of orders before they are processed. It is achieved by accumulating user data points by recognising characteristics and historical trends linked to suspicious activity and fraudulent orders.

Businesses employ this approach to detect fraud in their online transactions to avoid significant profit losses.

Many industries, such as banking, insurance, and e-commerce, use fraud detection technology. With the ever-changing world of technology and many variables to consider, a real-time fraud detection system is critical.

Cyber security
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How Does Fraud Scoring Work?

Fraud Scoring uses anti-fraud software to examine user data derived by rules that add or deduct points based on a user’s known data points.

For example, a user activity could be a login, signup, or card payment. The user’s IP address, device setup, or email address are examples of known data points. This information is incorporated into risk rules, allowing you to quantify a specific activity’s danger. Such a user could be banned or, at the very least, referred for manual assessment by a human.

Like credit checks done by credit bureaus, When examining the financial risks involved, our Credit Sesame reviews can help grant loans or open new accounts. Fraud scoring also approves, rejects, or evaluates specific actions automatically, which is a crucial part of online transactions.


Benefits of Fraud Scoring:

Beyond helping your business to crack down on transaction frauds and process reasonable payments, a fraud score has a lot of benefits to offer, which include:


1. Increases Smooth Payment

Automating reviews with risk scores creates a more pleasant customer experience. For example, Amazon does not request the Card Verification Value (CVV) of a credit card to speed up the payment process. You can cut the number of steps between your user and their payment if you only look at risky behaviour.


2. Unique Authentication

Even if your risk numbers indicate that manual review of your identity details (such as national identity card, birth certificate or passport) is required, you can still use triggers to add an extra layer of security. Let’s say someone joins your platform, but their transaction data indicates they’re a potentially dangerous user.

Additional authentication, such as two-factor authentication (2FA), could be triggered by your risk prevention system, which can confirm their identity and deter potential fraudsters.


3. Fraud Scoring Allows Automation

Rather than manually evaluating each transaction, you can have the software allocate a value to it and approve or deny it based on the results. However,  you can review actions for which the results are inconclusive.


4. Adaptability

You can choose how you want to mitigate risk by balancing the numbers yourself. Certain items, such as low-value digital downloads or high-value goods, could be the basis for this. Remember that not all fraud prevention tools allow you to adjust the thresholds manually.


5. Helps Your Business Scale

With the scoring fraud software, your store can process many more transactions in a shorter amount of time. This allows you to focus on growing your business while risk management is handled in the background, giving you complete peace of mind.



Cybercriminals are not showing any sign of stopping soon, so it’s up to business owners to protect themselves from fraud with fraud protection activities like fraud scoring.

Business owners can also protect themselves by checking a user and reviewing their identity credentials to confirm that they belong to the user.




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