What Does Mitigating Fraud Look Like? - Part 1

What Does Mitigating Fraud Look Like? - Part 1

February 20, 2020

By Janet Wagner for Card Not Present (Sponsored by Ekata)

There is no “one-size-fits-all” fraud prevention strategy, and consumers often see some of the same security measures on the sites and apps they use. However, 61 percent of consumers believe that companies with access to their personal data are responsible for avoiding fraud, and 90 percent are concerned they will be a victim of fraud in the future.

Consumers often see fraud prevention in the form of:

  • Two-Factor Authentication (2FA)
  • Know Your Customer (KYC)


A lot of websites use CAPTCHAs, like the “I’m not a robot” prompt when we’re creating an account or filling out a form. CAPTCHAs block bots from filling out sign-up and contact forms during checkout. However, CAPTCHAs that require users to type in the answer have an 8 percent failure rate. If the solution is case sensitive, the failure rate jumps up to 29 percent. 

Most visitors would rather not have to go through a CAPTCHA before they can submit a web form or complete checkout. And if they fail the CAPTCHA twice, they are likely to abandon the site altogether.

Two-Factor Authentication (2FA)

If you have an online bank account, then you should already be familiar with two-factor authentication (2FA). 2FA is something that a lot of customers see on the websites they use. After entering your username and password, a code is sent for authentication, usually in a text message or an email. 2FA is used by digital platforms for many reasons, including protecting user accounts from bot attacks and account takeovers.

Like CAPTCHAs, 2FA adds friction, and many consumers would rather not have to go through it. A SecureAuth Corporation 2FA survey found that 74 percent of companies using 2FA receive complaints about it from users, and nearly 10 percent of users hate 2FA.

While many consumers may not like 2FA, it’s very effective at blocking wide-scale bot attacks. Research by Google found that sending an SMS code to a recovery phone number can help block 100 percent of automated bots, 99 percent of bulk phishing attacks, and 66 percent of targeted attacks.

Know Your Customer (KYC)

Know Your Customer (KYC) is a series of mandatory processes for identifying customers, and applies primarily to financial institutions like banks. The main goals of KYC are to ensure that customers are who they say they are and to help stop fraud and money laundering. 

What KYC looks like to customers depends on the country and the processes the financial institution has in place. For example, a bank or payment app based in Ireland could require each customer to upload a visual ID like a driver’s license or passport, video selfie, or passport-style selfie. KYC is used primarily at account opening, but sometimes it’s used to periodically confirm the identity of existing customers. 

Thomson Reuters surveyed a set of financial institutions and corporations about KYC and found that 89 percent of corporate customers did not have a good KYC experience. Thirteen percent of those corporate customers changed their financial institution because of it.

Read Part 2

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