Customer Service

A new approach to fighting fraud while enhancing customer experience

From the era of old-fashioned snake oil salesmen and Ponzi schemes to today's sophisticated phishing attacks, fraud has been a part of human societies and economies the world over. However, fraud has assumed menacingly large proportions as of this writing - PwC’s Global Economic Crime and Fraud Survey of 2022 estimates that external fraud is on the rise, particularly in technology, media and telecommunications industries. McKinsey reports that in the US, the world’s largest economy, the Federal Trade Commission received 2.8 million fraud reports in 2021, and fraud losses rose 436 per cent to 5.9 billion USD. Similarly, internet crime losses are around 6.9 billion USD, a 392 per cent rise from 2017 levels.

Here is a compilation of the primary types of fraud that are affecting not only the United States but also international markets across Asia, Australia, the Middle East, South America, and Europe:

  1. Product frauds, targeted at customers, such as credit and debit card fraud
  2. Misappropriation of assets
  3. Deceptive accounting practices or financial statement manipulation
  4. Fraudulent activities related to procurement
  5. Fraud related to falsifying customer identities
  6. Illicit insider trading
  7. Cybercrimes.

It goes without saying that there are vast economic costs of such fraudulent activity. Besides the technology, tools, people and process costs to guard against and mitigate such crimes, one of the most important impacts is on customer experience in your customer-facing products. Tighter data protection and fraud control measures often result in a downturn in customer satisfaction numbers. Many times, the control measures are poorly designed, leading to further frustration and friction with customers.

There is an inherent dichotomy between the goals of compliance and fraud management groups versus those of the sales, marketing and customer success teams at play here. To resolve this friction, and ensure the dual goals of the organisation are met, business leaders must design and execute a stage-wise fraud prevention strategy.

Leverage data to understand the cradle-to-grave life cycle of each of your customer-facing products, and identify potential opportunities in that lifecycle that could be exploited by bad faith actors to cause legal, economic or reputational damage to your organisation, or to your customers.

Here are some ideas, broken down by phase:

  • Deterrence - Ensure the fraud strategy, once in place, is broadcast from the digital rooftops. Whether from your social media channels, your website, your newsletter or other communities, talk about your tracking and monitoring capabilities and the benefits they offer to customers. It’s both a simple deterrent to bad faith actors as well as reassurance to your customers.
  • Prevention - Make constant risk assessment your organisational mantra. Besides putting the controls and usage strategies in place, educate your internal teams as well as customers about why preventive measures are essential to safeguard customer information and assets. Raise awareness levels and build a fraud mitigation culture. This strategy may also incorporate sharing low- or no-cost tools and services to your customers to prevent fraud. During onboarding, notifications and alerts on transactions must be ‘on’ by default for example, and customers can opt-out rather than opt-in to such services. This is a subtle shift in defining customer experience that can offer many benefits. Another piece of your strategy may include building a multi-layered stack of controls – for example, authentication is a vital piece of any transaction that may need to be bolstered: for instance, provide customers simple in-app capabilities to ‘swipe right’ to confirm high-value transactions that may need a customer authentication and confirmation.
  • Detection, Investigation and Dispute Handling – While leading machine learning models are deployed to learn about and identify patterns that lead to fraud detection and investigation, ensure dispute handling is simple, straightforward and timely. Remediation paths for false positives (transactions flagged as potentially fraudulent that are legitimate) must be easy and hassle-free. Such controls and flows buoy customer confidence in the institution and ensure that the organisation can actually deploy stricter fraud control mechanisms without suffering customer dissatisfaction.

For their part, customers value organisations that react speedily to potentially fraudulent activities. A significant 39 per cent of them would even pay an additional fee for enhanced protection controls, per McKinsey.

McKinsey recommends paying attention to customer experiences across two critical customer journeys – one for true frauds and one for false positives. Design detailed experiences incorporating a panoply of tools, processes, and techniques. Build awareness of the options customers have, and educate them on what actions they can take to prevent fraud, as well as report it.

In summary, a sound fraud control strategy powered by technology and processes, as well as customer communication for education and collaboration are key to enforcing strict fraud control measures while keeping customer satisfaction numbers high.

* For organizations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed on organizational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive, yet modular suite of services is doing exactly that. Equipping organizations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organizations that are innovating collaboratively for the future.


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