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Financial Costs Of Fraud & 3 Chances To Take Some Of It Back

Pindrop® Labs reported in our 2017 Contact Center Fraud Report,  that every incoming call costs contact centers $0.58 in fraud.  Fraud costs typically scale as the number of calls increases, but fraud-related costs like card re-issuances, customer attrition, and time spent on investigations can swell to two or three times the amount of the actual fraud loss. 

41% of consumers blame the brand for any fraud that occurs. Costs must be associated with loss of the customers as well as the remediation of their financial losses. The weakened brand position and reputation impacts may be immeasurable but the costs associated with remediation are anything but. Remediating an account takeover is an investment in time, especially without intelligent case management tools to connect fraud events. The remediation on just a single account takeover can take up to 16hrs of work.  Making fraud a very expensive problem not to solve.  

In the field, it would not be uncommon to see fraudsters owning 7 to 10 accounts for each of their chosen institutional targets. If your business is targeted by an organized crime ring,  there could be as many as 10 professional fraudsters working simultaneously to defraud one organization. In this scenario, as many as 100 accounts would be controlled by fraudsters, resulting in 1600 hours of remediation. 

16 Hours Per Compromised Account x 100 Compromised Accounts = 1600 Work Hours To Remediate

 1600 hours of remediation is 40 analysts worth of work for an entire week. A week’s worth of wasted costs and productivity causes backlog and can result in fraud losses and related remediation costs ranging from several thousand per account, higher if the fraudster had been targeting the institution with reconnaissance activities. Sadly, when a fraudster is successful, they will continue until their efforts are abated. So the problem only grows in intensity over time.  

What can businesses do to address this profit chewing problem? The sooner you can identify the signs of an attack, the sooner you can block account takeover attempts. 

  1. Process, how efficient is your case management? What happens when they get into a backlog? Are transactions waiting, or is the customer/your company exposed to more risk at this point? Having an efficient process for identifying, working, and dispositioning fraud cases becomes critical if you are reaching scale. Look for opportunities to reduce false positives at every point to reduce the case work the fraud team is reviewing. If your fraud is increasing, make sure remediations costs aren’t ballooning alongside them.
  2. Training – Training the front lines of customer service is a must. While these days customer experience counts for so much, there is still a need to maintain security protocols. Gaps in training and knowledge will be found and exploited by skilled fraudsters. Keep up with training sessions and encourage front line workers to tackle knowledge gaps.
  3. Technology – No matter how stringent the protocol, no matter how effective your process, without help from technology, fraudsters will get past a CSR using social engineering. A fraudster will study your processes and exploit weaknesses that might not even be known to you. Without aid of technology to hear the things that humans can’t, or see patterns in seemingly random data, fraudsters will continue to exploit known flaws in the system. As fraudsters and their tactics begin to become increasingly sophisticated, investments in technology can help identify fraud, wise investments in the right technology can help you identify fraud before the transaction can take place.

For help with any of these three ways to stop fraud sooner please contact Pindrop today