How AI-Based Fraud Prevention Can Help Businesses

Albert Gonzalez, AI Architect, Abbott

How AI-Based Fraud Prevention Can Help BusinessesAlbert Gonzalez, AI Architect, Abbott

The future of AI-based fraud prevention depends on the combination of supervised and unsupervised machine learning.

In the past, rule-based engines and simple predictive models can detect most fraud attempts. They are unable to keep up with the current scale and magnitude of fraud attempts.

Fraud attempts and breaches have become more subtle in recent years, with organized crime and state-sponsored organizations employing machine learning algorithms to devise new ways to scam digital enterprises. Fraud-based assaults have a distinct pattern, sequence, and structure that makes them impossible to identify using only rules-based logic and predictive models.

To combat fraud and prevent the theft of sensitive transaction data, AI and machine learning platforms that combine supervised and unsupervised machine learning to offer a weighted score for any digital business activity in less than a second are necessary. For the increasing upsurge of nuanced, highly sophisticated fraud activities, AI can be a perfect match.

Ways Organizations Benefit from AI-Based Fraud Prevention

The blend of supervised and unsupervised machine learning is the future of AI-based fraud prevention. Supervised machine learning specializes in analyzing historical events, factors, and trends. Historical data is used to train supervised machine learning models to identify trends that would be impossible to detect by using rules or predictive analytics.

Unsupervised machine learning excels in detecting anomalies, interrelationships, and valid links between new variables and components. Thus, the future of AI-based fraud prevention is defined by combining both unsupervised and supervised machine learning, which is the cornerstone of the top methods in which AI prevents fraud.

AI makes it possible to identify fraud attacks in real-time 

The future of fraud management is artificial intelligence's capability to detect fraud attacks in less than a second using powerful AI-based grading tools. New threats are difficult to detect when a digital firm depends solely on structured learning and rules. Chargebacks appear six to eight weeks after a fraud has occurred, prompting digital enterprises to change their rules engines. AI eliminates the need to constantly play catch-up to online fraud by balancing supervised and unsupervised learning.

AI is re-defining fraud prevention 

Prior to AI, fraud protection systems relied solely on rules, which excel at evaluating past fraud trends but offer no predictions for the future. Digital firms acquire better sharpness and clarity about the relative risk of consumers' behaviors by integrating supervised learning algorithms trained on historical data with unsupervised learning.

AI-based fraud prevention enables low-margin businesses and product lines to stay profitable 

Price, availability, and a positive and seamless client experience are all crucial factors for e-commerce enterprises. The problem is to remain profitable while generating new clients whose purchase history isn't included in their fraud systems' supervised learning history. From a gross margin standpoint, an AI-based fraud prevention system that integrates both unsupervised and supervised learning pays off.

See Also: Top Artificial Intelligence Solution Companies