Cybersecurity Best Practices for Strengthening Fraud Protection

Are you ready to fight fraud with some serious cybersecurity best practices?

In 2024, 79% of businesses experienced attempted or actual fraud. Yes, you read that right. Nearly 8 out of 10 companies were affected by fraudsters last year alone.

The issue is many organizations feel like they have strong security in place. But they have one piece of the puzzle in place, fraudsters simply aren’t using brute force attacks to get in anymore. They’re walking right past your front door and sneaking in through the unlocked side door nobody’s guarding.

The good news is that by implementing key cybersecurity best practices and integrating holistic fraud protection features into your payment processing systems, you can significantly reduce your risk. Advanced fraud protection solutions use AI and machine learning to identify suspicious transactions before they cost you money.

I’ll show you exactly how…

Table of Contents

In this post, you’ll find:

The biggest cybersecurity flaw most companies have: YOU
Cybersecurity layers that actually work
The power of AI and machine learning for fraud detection
The best practices for real-time monitoring

It’s Not Your Technology – It’s People That Are Your Biggest Fraud Risk

Here’s something you might not know…

Human error accounts for 88% of all data breaches. Yes, that means the vast majority of all breaches result from someone making a mistake, not an elite hacker with world-class resources.

I know what you’re thinking, how could that possibly be true? Well think about it, a click on a phishing email. The use of a weak password. Sharing credentials over an unsecured network. They’re small mistakes with big consequences.

Your staff are your weakest security link – and here’s the rub – fraudsters know it. In fact, they target that human error link with relentless social engineering and phishing attacks. These basic errors open the door for criminals to penetrate your business.

Fraudsters will always look for ways to exploit the human link. Here’s why employee training must be part of your cybersecurity foundation. If your team members don’t know how to identify phishing emails or recognize social engineering tactics, you’re vulnerable no matter how advanced your security technology is.

Employee training needs to be practical, relevant and ongoing. Regular sessions that cover topics like phishing recognition, password best practices, and social engineering tactics can help close the human error gap that cybercriminals love to exploit.

Layer Your Defenses Until You Go Bald

The one secret that successful security-conscious businesses use is multiple cybersecurity best practices. They don’t use one single solution. They have various layers of defense to detect and mitigate threats at different stages. In other words, they don’t just have a security guard, they have the guard, an alarm system, and surveillance cameras.

Let’s look at a few examples of layering your defenses:

Authentication layers that verify identity at various points. Multi-factor authentication is no longer optional – it’s now table stakes. You must require users to prove their identity through something they know (password), something they have (phone or token), and ideally something they are (biometric authentication).

Transaction monitoring that flags unusual activity in real time. Let’s say somebody who typically makes $500 purchases suddenly tries to initiate a $50,000 transfer. That should immediately raise a red flag.

Encryption protocols that scramble data both in transit and at rest. If fraudsters intercept data, it’s useless to them if it’s encrypted.

Access controls that restrict who can see and do what. Not everyone in your organization should have access to sensitive information and systems. Use role-based permissions to ensure employees can only access what they need for their roles.

The key is for each of those layers to communicate with each other and work together for maximum protection.

AI and Machine Learning: Your 24/7 Cybersecurity Fraud Detection Squad

Let me tell you about one of the most powerful game-changing innovations in fraud prevention…

Traditional fraud detection systems rely on rules. But rules-based systems are only as good as their rules. Fraudsters are always finding new ways to circumvent these systems. By the time you add a new rule to stop their latest scam, they’ve already moved on to something new.

AI and machine learning, on the other hand, work differently. These systems can learn from billions of transactions to identify patterns humans simply can’t. They adapt in real-time as fraud tactics change and evolve.

AI-driven fraud protection features are smart systems that evaluate more than 500 risk factors in milliseconds. They analyze everything from device fingerprinting to behavioral biometrics to transaction network analysis. They create a composite risk score by looking at how these factors interconnect to determine if a transaction is legitimate or potentially fraudulent.

The best part about these systems is they get smarter over time. The more transactions they process, the more they learn about what normal looks like for your particular business and customers. This is key – because unlike a rules-based system, these solutions catch anomalies that might fly under the rules-based radar.

Real-Time Monitoring: Nipping Fraud in the Bud

Here’s a reality check…

Online payment fraud is projected to reach over $362 billion between 2023 and 2028. Yes, that means over $100 million every single day will be lost to fraud.

Successful organizations that minimize their losses vs those that get hit hard are distinguished by real-time monitoring. It sounds simple, but real-time transaction monitoring to identify fraud while it’s happening vs finding out about it weeks later can be critical.

Real-time fraud monitoring works by scrutinizing transactions as they occur and then making nanosecond decisions to either approve, decline, or place them in a risk-based authentication review. Real-time response matters because if fraudulent money is sent, recovered it’s harder.

Your system should track things like velocity patterns (number of transactions from the same source in a short timeframe), geo-location anomalies (purchases from unusual locations), device fingerprinting (is this the same device that’s been used before), and more.

Automate those fraud alerts to immediately ping your team when they detect suspicious activity. Speed is of the essence – the faster you can react the better your chance of stopping fraud in its tracks before it can do too much damage.

Fraud Resistance Should Be Integral To Your Payment Infrastructure

The most successful fraud prevention comes when the battle to thwart fraud isn’t bolted on as an afterthought, but built in right from the start.

In other words, choosing payment processors, gateways, and providers that focus on security and have robust fraud protection features as standard is a must. Look for solutions with features like tokenization (masking card data with tokens), PCI DSS compliance, fraud scoring, etc.

Virtual cards and one-time payment credentials are increasingly popular because they minimize risk and exposure. These can only be used for a single transaction, so if they get compromised there is little scope for ongoing fraud.

Payment verification features that prompt additional verification for high-risk transactions or anomalous activity is good. Yes, this adds friction – but that friction is 100% worth it when you block a $50,000 fraudulent transfer.

And a quick note about vendors and partners. Remember your security posture is only as good as your weakest vendor or link in your supply chain. Extend that same scrutiny and rigor to them.

Final Thoughts

Building strong fraud protection isn’t about a single silver bullet solution. It’s about creating a layered, holistic approach that combines multiple cybersecurity best practices. The approach must address human vulnerabilities, leverages next-generation technology, and maintains vigilance.

Focus on staff training to shore up the human error gap. Use multi-layered cybersecurity best practices that work together. Deploy adaptive, AI-powed fraud detection that can keep up with evolving threats. Use real-time monitoring to detect and stop suspicious activity in its tracks. And most of all, build fraud resistance into your payment processes and infrastructure from the ground up.

Fraudsters are always going to be out there and they will always be adapting. But by using best practices and maintaining a proactive approach, you can position your organization to keep up. Your business is too important to become just another statistic in the growing fraud epidemic.

Don’t wait for your organization to be the next 79% of companies that fall victim to fraud this year. Get to work today because the fraudsters certainly aren’t waiting around to try and exploit you next.