New developments in fraud detection technology saving businesses millions of dollars with machine learning capabilities.
Current fraud detection methods have caught fraudulent transactions, but they have limitations. To create fraud prevention algorithms, developers must figure out how fraudsters are stealing money and write a code to address specific scenarios. These algorithms can take up to two years to develop. By the time companies implement these new fraud detection algorithms, fraudsters have already moved learned new ways to evade detection. The problem with current fraud detection algorithms is that they are reactive. Machine Learning can be used to proactively detect fraud, eliminating the problem with current fraud detection development.
Machine Learning allows computers to continuously learn how fraud is being committed, making it more efficient than human-developed algorithms.
Machine Learning sorts through Big Data day and night using a variety of base algorithms to develop consumer behavior profiles. The machine compares each transaction that is made with a customer’s normal spending behavior. If it is outside typical spending habits, the transaction will be flagged for review. In the past, each flagged transaction would have to be reviewed manually. Machine Learning uses an algorithm known as Neural Networks to replicate human decision making. Machine Learning makes thousands of decisions per second, outscoring human efficiency.Machine Learning can help businesses save millions of dollars by detecting and flagging chargebacks. Using the Logical Regression algorithm, Machine Learning reviews purchases and customer activity to determine whether there is a high risk of a chargeback. Chargebacks occur when a customer uses a credit card to purchase a product or service and then subsequently disputes the transaction with the credit card company. The credit card company then refuses to issue funds to the company. Chargebacks can be extremely costly to a company and can even cause small businesses to go bankrupt.
Companies like NeuroChain are leading the industry with innovative Machine Learning technology. NeuroChain’s bots are becoming smarter everyday – they can intelligently sort through transaction data and flag fraudulent transactions, potentially saving your company millions of dollars per year.