Leveraging digital footprints to outpace evolving fraud tactics

By Maanas Godugunur, senior director, fraud and identity, LexisNexis Risk Solutions

From login to checkout, fraud lurks in the shadows – highly sophisticated, global in scale and deeply entangled in the retail journey.

Digitalization has introduced new challenges that demand comprehensive fraud management strategies. Advances in AI and automated bot attacks have turned fraud into a moving target – constantly shifting, adapting and becoming harder to pin down.

Businesses obviously use digital channels to engage with customers and meet growth targets. Since consumers demand fast access to products and services, retailers are shifting their digital strategies to focus on collecting only the necessary data and prioritizing speed to reduce friction.

Fraudsters understand this and exploit vulnerabilities in these new touchpoints to their advantage. Human-led phishing schemes and cross-border fraud rings continue to expand, increasing cost pressures.

This leads to a new challenge. How can businesses reduce fraud, protect customers, lower false positives and enhance customer experience, all while improving profitability and efficiency?

To stay ahead of fraud, businesses must treat adaptability not as an option, but as a core strategy. Success hinges on relentless evolution: Meeting today’s threats head-on while anticipating those of tomorrow.

The role of digital footprints in fraud prevention

A customer’s digital footprint – including connected devices, transactional behaviors, geolocation data, email address and other associated attributes – serves as a fundamental tool in combating fraud. The data forms a unique identifier that separates trustworthy customers from potential fraudsters.

Take the ability to detect anomalies, for example. A customer’s usual behavior might involve frequent logins from their smartphone in a specific region. If a login suddenly comes from another location hundreds or thousands of miles away or from a new, unfamiliar device, businesses can act on these potential red flags to tighten security while preserving customer convenience.

This example highlights the use of a single attribute. Parks Associates reported that in 2023, the average US household with internet access had 17 connected devices. Each household uses devices tied to specific individuals, with associated email addresses, social aliases and phone numbers. The variables multiply when considering different permutations and combinations.

Part of the solution includes a global digital identifier that has established an individual’s unique digital footprint. Pinpointing legitimacy in real time sharpens the focus on who’s real and who’s risky so that businesses can welcome trusted customers effortlessly while shutting the door on fraud.

This approach can even add valuable insight when identifying new customers. A digital identity might be new to your business – a guest checkout, opening a new bank account or completing a payment for the first time. However, a consumer’s supplied information and device data available through a consortium of retailers can help paint a more complete picture of each identity coming through the business environment.

Think of it as intelligent access: Smooth for the trusted, cautious for the questionable. It enhances experience without sacrificing safety. Fraudsters’ tactics are evolving

Fraudsters constantly up their game. They now move beyond automation, using human-initiated attacks that mimic real customer behavior. Phishing, social engineering and scam calls are now rife, complicating precise fraud detection. Fraudsters skillfully weaponize stolen credentials by posing as real users or fabricating entire identities that are nearly indistinguishable from the real thing.

Generative AI technology has further advanced their ability to create automated scripts that execute attacks like credential stuffing in a more human manner, making it increasingly difficult to differentiate between bot-driven and human-led attacks on a global scale.

Cross-border fraud also remains a major challenge. Digital interactions blur geographical boundaries, yet technology can uncover specific fraud patterns linking attacks and compromised credentials across regions.

A fraudulent credential never stays local. They’re global weapons, capable of reaching any customer, anywhere, almost instantly, even across industries. A financial scam targeting ecommerce today may strike a financial institution tomorrow.

Global intelligence as a shield against fraud

A fraud intelligence consortium analyzing billions of transactions each year reveals the interconnected nature of the global ecosystem. Analysis shows businesses can no longer combat fraud in isolation. To succeed, they must use global identity intelligence, identify shared fraud patterns and apply advanced AI technologies to counter attacks effectively.

Increasingly complex fraud makes it impossible for a single solution to ensure complete security. A multi-layered security strategy that combines data points, techniques and various fraud detection tools, such as device intelligence, behavioral intelligence, geolocation tracking and real-time fraud insights, is another essential part of the solution.

Behavioral intelligence helps to identify individuals by analyzing the genuine user’s typical typing patterns and touch screen usage, then comparing it with each new interaction. Do the actions of the entity logging in align with what is expected from that user or are there anomalies that could indicate an intruder? By weaving in geolocation, device and email intelligence, this adaptable framework pinpoints threats with precision without compromising the ease customers expect.

Workflows must stay adaptable. Fraud tactics that challenge businesses today can evolve quickly, making previous protection strategies ineffective. Organizations require agile fraud prevention systems that scale easily and integrate new signals as they develop.

Balancing customer experience with fraud mitigation strategies

Overly strict security measures frustrate legitimate customers and damage trust. Many believe strong fraud controls cause customer churn, but this perception is rooted in a point solution approach. 

Thoughtful fraud strategies enhance customer experiences, delight loyal customers and reduce exposure to fraudsters. By leveraging accurate digital identity data, businesses can reduce false positives and create a secure environment that offers trustworthy customers a seamless interaction while blocking fraudulent attempts.

Businesses can address fraud by recognizing the value of digital footprints and leveraging global shared intelligence. Orchestrating multi-layered risk signals protects loyal customers and ensures their business models remain robust.

Fraud isn’t going away but with strategic digital defenses, trust can thrive. Gaining a deep understanding of customer digital footprints then sharing the resulting risk insights between businesses across regions and industries empowers businesses to grow boldly, even on a global stage.

About the author

Maanas Godugunur is Senior Director of Fraud and Identity at LexisNexis Risk Solutions.

Article Topics

AI fraud  |  behavioral analysis  |  biometrics  |  digital identity  |  fraud prevention  |  LexisNexis