Fraud Detection

What is fraud detection?

Fraud detection is the proactive process of identifying attempts to defraud your organization, executives, employees, and customers across multiple channels and attack vectors.

Fraud is defined in the United States criminal code as an intentional act of deception for personal/financial gain, or to deprive someone else of a legal right. Fraudsters, cyber criminals, and digital adversaries can employ many different kinds of deceptive tactics in an attempt to scam or defraud target organizations, their executives, employees, and customers.

What is a fraud detection system?

A Fraud Detection System (FDS) is a software solution that automates the process of identifying and detecting attempts to defraud your organization at scale. 

Modern fraud detection systems depend on sophisticated technologies like artificial intelligence and big data analytics to automate fraud detection at scale and minimize false positives. FDS solutions for banking and credit businesses detect fraud by analyzing internal data (e.g. banking transactions, user activity logs, etc.), while tools like ZeroFox use AI to monitor external channels (e.g. the surface, deep, and dark web, social media, etc.) for fraudulent attacks against your organization, brand, people, or assets.

How does fraud detection work?

Fraud detection software tools depend on artificial intelligence and machine learning technology to accurately detect fraud at scale. At ZeroFox, these AI-driven capabilities fall under two broad categories:

1. Computer Vision (CV) technology that allows computers to process, analyze, and understand the contents of digital images. 
2. Natural Language Processing (NLP) technology that allows computers to process, analyze and understand textual content.

Within these two categories, we have developed multiple AI-based classifier models that can be used to detect fraud across digital channels. These include:

• Language Detection, used to analyze text in 50 different languages for indicators of fraudulent activity,
• Link Analysis, used to identify malicious URLs that lead to fraudulent domains,
• Image Comparison, used to identify fraudulent social media profiles or otherwise fraudulent use of your brand assets,
• Video Analysis, used to identify threatening or malicious video content or detect deepfake videos, and
• Optical Character Recognition (OCR), used to extract text embedded in images, which can reveal hidden threats or messages.

Armed with these capabilities, ZeroFox monitors the public attack surface at scale for threat indicators, then analyzes the data with help from AI and ML to reliably detect and report on fraudulent activity targeting your brand, people, or assets.

Five cyber scams you can prevent with fraud detection

Fraud detection software like ZeroFox can identify, detect, and protect your organization against many kinds of fraud that originate on external digital channels. Five examples include:

• Web Domain Fraud: In web domain fraud, digital adversaries attempt to impersonate a target organization’s website by registering a look-alike domain and fraudulently replicating the organization’s real website and brand assets. AI-driven fraud detection software enables web domain fraud monitoring, the ability to scan the public attack surface for unauthorized deployment of your brand assets, logos, and trademarks.

• Social Media Fraud: Social media is becoming an increasingly popular attack channel for digital fraudsters, leading to millions of dollars in financial losses in 2021. In addition to online shopping scams, investment scams, and romance scams, we’re also seeing an increase in account spoofing and impersonation attacks targeting corporate executives. AI-driven fraud detection enables social media security monitoring at scale  automatically detecting fraudulent accounts that try to impersonate your company or its executives.

• Email Scams: Email is a typical vector for fraudulent cyber attacks, including phishing and spear phishing attacks that target recipients with malicious links or attachments. Fraud detection software can use AI-driven capabilities like NLP and CV to automatically detect scam emails and highlight malicious links directly in your inbox.

• Executive or VIP Impersonation: Digital adversaries can use technology to impersonate high-authority or VIP individuals and commit fraud, often by directing others to execute fraudulent transactions. AI-driven fraud detection delivers executive protection by identifying impersonation attempts across the entire public attack surface and helping organizations anticipate and mitigate impersonation attacks before they have a chance to succeed.

• Brand Abuse: Unauthorized use of your brand assets to impersonate your brand and scam your customers is fraud. Fraud detection software uses artificial intelligence to monitor public digital channels at scale for unauthorized use of your organization’s brand assets, logos, and trademarks. The ability to detect brand abuse at scale helps organizations fight back against revenue-diverting eCommerce fraud, counterfeiting, data theft scams, and other kinds of fraud.

The ability to detect brand abuse at scale helps organizations fight back against revenue-diverting eCommerce fraud, counterfeiting, data theft scams, and other kinds of fraud. 

Why is fraud detection important?

Protecting your financial resources

The most common objective for digital fraud attacks is stealing financial resources from the target. Web domain fraud, impersonation attacks, and email scams can all be used to manipulate your organization, employees, or customers into sending fraudulent transactions or inadvertently sharing access credentials for banking/credit accounts with the attacker.

Protecting your data

Digital fraudsters may attempt to get access to your organization’s internal network in hopes of stealing your sensitive customer data. This data may then be sold on to other scammers and used to commit fraud or identity theft. 

With the average cost of a data breach in the United States now pegged at $9.44 million, proactive fraud detection can shield organizations from millions of dollars in data breach remediation costs.

Protecting your reputation

When your brand assets are used to defraud your customers, the result is a negative experience that impacts consumer trust in your brand. If you experience a large data breach due to fraud, the resulting fallout and negative media coverage will significantly impact your brand’s reputation.

Fraud detection gives you the ability to detect and prevent fraud before a successful attack negatively impacts your brand reputation.

Implement fraud detection at scale with ZeroFox

ZeroFox provides enterprises protection, fraud intelligence, and adversary disruption capabilities to shield your organization from fraudulent attacks that originate from throughout the public attack surface. 

As part of our fine-tuned fraud intelligence cycle, ZeroFox leverages AI-driven data collection and analysis together with analysis from human threat experts to detect fraud and deliver actionable fraud intelligence that helps SecOps teams fight back.

Ready to learn more?

Watch our free webinar Protect Financial Customers From Fraud and Fakes to see how you can identify and mitigate social media risk with fraud protection from ZeroFox.