top of page

Fraud Operations at a Glance: Summary of a Fraud Study

Lately CNP and Risk Ident have posted a “2018 Fraud Operations Study” that presents statistics on Fraud Operations in different companies. The report gives insights to the fraud prevention practices and allows fraud specialist to see their own effort in the relation to others. As report says:” Fraud professionals have very little visibility into how their peers conduct their fraud prevention operations, they have relatively little insight beyond their own instincts and results guiding their efforts. Industry-wide benchmarks are rare.” - This is remark is precise, and we appreciate this insightful report

We know that fraud professionals are “busy bees”, therefore, if you still did not have time to read the report, you can find the key findings from the study below:

Who are fraud professionals?

Fraud professionals differ from specialists working in other departments simply because there is not enough awareness of this professional path and there is no established educational track leading to a job in fraud prevention. Therefore, most people stumble into fraud prevention career, or are asked to do fraud prevention as an addition to their main job. Fraud and Risk practitioners often lack guidance and knowledge about the industry or its best practices.

How are fraud departments structured?

Fraud departments are small: ” By-and-large, fraud pros are working in small teams or by themselves. Forty percent of merchants, overall, say they conduct their operations with a team of three or less.” - the study reveals. It is also worth mentioning that the small size of the teams doesn’t change as the business grows. Only companies with 1 billion turnover and more reported more often than others having big scale fraud and risk teams.

The lack of awareness and the “accidental” nature of fraud function in the companies leads to unclear positioning of fraud teams in the company’s hierarchy. Most fraud teams report to Finance (32%), followed by Operations (15%), and Customer Service (11%), but responsibility for fraud exists in a wide variety of departments. This finding shows the lack of awareness and understanding regarding fraud and risk function.

This overall confusion is also reflected in the sheer number of titles that fraud professionals work under, the survey included approximately 300 companies in which fraud team members work under 130 titles (!). Most popular titles were Fraud Analyst and Fraud Manager, however, 23% of the correspondents said they had “no specific title assigned”.

N.B.: This is an important piece of information for hiring managers – don’t decline applicants if there is no mentioning of “FRAUD” or “RISK” in their current job title. It seems that some valid candidates had never got the title matching their function description.

How fraud teams are perceived within the business?

As already stated earlier, the position of fraud professionals is complex, the report mentions that within some organizations there is a notion that fraud prevention restrains sales growth. Thus, FP function is seen in the “opposition” to the core business goals.

In addition, companies do not want to give an impression that they struggle with fraud, as there is fear that this may influence their reputation. “This leads to fraud professionals being isolated from others within their companies and from bodies of knowledge outside their company that could help them.” – states the report.

How do fraud prevention teams fight fraud?

The report sheds light on the most common practices the fraud expert use:

Professional Research and Sources of Information

The respondents said their top learning sources are:

75% industry events and conferences

68% industry publications

67% personal research

The report states, 48% of fraud specialists are constantly evaluating their existing solution and the need for new tools.

Fraud Technology

46% use layered approach: an in-house built system augmented by third-party tools

26% use only third-party tools

Fraud Tools

69% use rules-based fraud case management systems

61% use bank issued tools ( AVS, CVV etc’)

56% use IP Geolocation Services

51% use Device Fingerprinting

While many merchants are aware of the new technologies few have adopted them:

29% machine learning systems

23% 3DS

21% 2-step Authentication

In addition to that most merchants, around 80%, lack visibility on channel and type of fraud and device type.

Manual Review

47% of merchants in the study have a manual review rate of less than 5%

20% said their manual review rate is between 5-9%

78% of fraud experts handle all manual reviews in-house and the rate of an average review is up to 10 minutes.

For manual review fraud teams most often use:

57% - Social Media

56% - Call to the customer

48% - Professional verification tools

Fraud Teams KPIs

74% - Measure Fraud Chargeback Rates

51% - False negatives (missed fraud)

The biggest challenge is tracking and refining prevention for false positives. 42% of fraud teams don’t know what their false positive rate is. Out of those who track false positives 80% say the rate is below 4%.

Fraud Types

47% of fraud pros still see clean fraud as the main problem followed by friendly fraud - 38%.

However, friendly fraud marked the hardest to identify by 45% of the respondents, followed by account takeover mentioned by 37%.

To summarize, the “2018 Fraud Operations Study” by CNP and Risk Ident clearly shows that the awareness of fraud grows among merchants. However, the “shameful” nature of fraud creates a situation where companies are not eager to share information about their battles against abuse and fraud. Fraud function is frequently remains disconnected from other key functions and somewhat misrepresented as “anti-sales” in the business. There is also a lack of communication between the fraud industry peers.

These findings show the importance of industry events and publications that can shed light on the trends in the fraud prevention field. Fraud experts should strive to come together and share their wealth of knowledge with the colleagues as well as promote positive perception of fraud prevention function in the business. Fraud prevention should take it’s proper and deserved place in the business hierarchy and used by all business functions to increase business profitability.

We encourage you to spare some time to read the full report and listen to the webinar. We would love to hear your feedback regarding the fraud operations topic.

Does your fraud team day to day operations fall in line with the report findings?

How important are fraud peers meetups and events for your team?

Credit for the image used goes to

bottom of page