Fluidity and extinction of fraud behavior: How to corner the rats

We’ve blogged about fraud alerts, fraud analytics, fraud models and fraud best practices.

Sometimes, though, we delude ourselves into thinking that fraud prevention strategies we put into place today will be equally effective over time.  Unfortunately, when a rat finds a dead-end in a previously-learned maze, it just keeps hunting for an exit.  Fraudsters are no different.  Ideally we want to seal off all the exits, and teach the rats to go and do something productive with their lives, but sadly that is not always the case.  We also don’t want to let too many good consumers get stuck either, so we cannot get too trigger-happy with our fraud best practices.

Fraud behavior is dynamic, not static.  Fraudsters learn and adapt to the feedback they receive through trial and error.  That means when you plug a hole in your system today, there will be an increased push to seek out other holes tomorrow.  This underscores the importance of keeping a close eye on your fraudsters’ behavior trends.

But there must be some theoretical breaking point where the fraudsters simply give up trying–at least with your company.  This behavioral extinction may be idealistic in the general sense, but is nonetheless a worthy goal as related to your business.  One of the best things you can do to prevent fraud is to gain a reputation amongst the fraudsters of, “Don’t even try, it’s not even worth it.”  And even if you don’t succeed in getting them to stop trying altogether, it’s still satisfying to know you are lowering their ROI while improving yours