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How data validation is an ally in payment fraud prevention

How data validation is an ally in payment fraud prevention

Nov. 11, 2020

Fraud prevention

DVA

Payment fraud attempts increase in face of economic instability and changes in consumers’ behavior. The Brazilian Banks’ Federation (Febraban) was one of the institutions to raise the alarm recently. According to them, phishing - the use of disguised messages to lead users to visit a link or download a document with malicious content - has grown 70% in the country since the COVID-19 pandemic. Around the world, banks, consulting firms, and governmental institutions are also alerting people about higher fraud risks.

 

For both customers and businesses, the cost of fraud can be high, not only financially. So improving fraud detection and prevention is crucial to maintaining a good relationship with consumers and protecting both financial health and the brand’s reputation. However, not every decision maker knows that data validation is also an ally in payment fraud prevention - from client registration to sending transactional communications.

 

5 ways data validation helps prevent payment frauds

 

1- Checking the status and authenticity of client’s data, such as ID, phone number and email;

2- Unifying information from different sources, departments or platforms, thus eliminating inconsistencies and duplicate data;

3- Customized rules to meet the regulations of each sector;

4- Ensuring that 100% of the information is validated before being sent out, avoiding incorrect charges or fraud;

5- Transparency and compliance with data protection regulations.

 

Attacking the original problem: client registration

 

Imprecise information when registering a client is generally the source of most of the errors that persist throughout the operations chain. Today, a variety of products and services can be simply purchased through the call center.

 

This is one of the examples in which the sales model itself can allow errors - from a communication misunderstanding or a typo to actual fraud attempts. 

 

Step one is strengthening the onboarding process of new customers, validating the information provided by them during registration. This includes checking the status of the ID or whether the email address actually exists.

 

In industries offering a wide range of services such as telecommunications, another concern is having different data entries for the same client - in the case he has subscribed to different products, such as paid TV and mobile. And thus eliminating data inconsistencies.

 

Although it seems like an obvious first step, taking care of registration information is not so simple. Let’s picture the world’s largest streaming platform, which registered 26 million new subscribers in the first two quarters of 2020 alone. More than one customer per second. Who will verify if each one of them is who they say they are?

 

For :hiperstream, the answer is in technology. Designed to validate a large volume of data, Data Validation Automation (DVA) is one example of a software that connects the database to external data sources, such as email and ID validation services, to automatically identify errors.

 

Data validation in financial communications

 

When we talk about transactional communications, an error - or even a fraud attempt - can also have its origin inside the organization. In Brazil, for example, invoices and deposit slip scams remain a constant concern.

 

In addition to allowing automated validation of these financial communications and more, DVA also unifies and automates the validation of information from different data sources or platforms.

 

It is a relevant feature for payment processors, for example. Handling transactions between two parties, these companies are subject to errors from the merchants or the customers, and need to take extra actions to prevent and mitigate risk.

 

Investing in prevention is cost-effective when dealing with payment fraud, not to mention other operational advantages brought by data validation to the business, such as identifying inconsistencies that may lead to financial loss and friction along the customer journey.


Although the challenges vary from one industry to the other, DVA’s flexible rules and our expertise across different sectors deliver tailored solutions to each client. Want to learn more? Contact us.

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