Equifax Fraud product manager, Rich Huffman, was recently published in Corporate Compliance Insights discussing how Boards of Directors can stay on top of trends in the fraud landscape and ensure C-level executives implement effective measures to detect and mitigate fraud.
Huffman recommends that
Boards also should encourage the executive team to set realistic goals. Companies shouldn’t aim to stop 100 percent of fraud, as this is impossible and would harm the experience of legitimate customers. Aiming to stop all fraud will result in high abandonment rates and harm to revenue. Instead, they should aim to find the mix that works best for their operations.
That mix should include a waterfall approach to detecting fraud by looking at a wide variety of information about an applicant. Simple things like validating an identity, which most organizations are already good at doing, start the waterfall. More detailed gates looks at the device the person is using, their presence on social media, and mine information from shared fraud data consortiums within an industry or across industries.
Beyond revenue loss, fraud also affects an organization’s reputation when consumers feel it’s too hard to do business with that company because of fraud prevention barriers or conversely when regulators begin to scrutinize what they believe are lax fraud protections. Fraud may not always be examined on the same level as revenue and other KPIs that directly impact executive pay and bonuses, but it needs to be tracked to effectively measure the health of the company.