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Fraud is Evolving - So Must Our Defenses

In my career, I've learned a crucial lesson: fraud is a shape-shifter. It constantly evolves, adapting and altering its form. Scams, authorized push payment fraud, and deep fakes have changed the landscape again. And so, to effectively combat fraud, our tools and methods must be just as adaptable and innovative.

Here are my three most important lessons from decades in AI and fraud detection.

AI and Machine Learning: Finding Needles in a Haystack

Artificial intelligence (AI) and Machine Learning (ML) have brought revolutionary changes across industries, and fraud detection is no exception. These technologies excel at identifying anomalies - finding the "needles in a haystack."

They can sift through enormous volumes of data, analyze patterns, and uncover fraudulent activities that would be nearly impossible for human analysts to detect manually.

However, aren't a complete solution. Models must be retrained as the landscape shifts. They also struggle with “change over time.” Where a series of events may seem normal in isolation in aggregate over 12 months they may be a pattern of fraud.

We also know that the attacks they counter don't remain static; they adjust. For this we have two other tools, rules and humans in the loop

The Power of Rules: Tracking Evolving Patterns

Here's where rule-based systems play a crucial role. These systems are excellent at identifying and tracking patterns that evolve. When new forms of fraudulent behavior emerge, rules can be updated to reflect these changes, ensuring the system remains effective.

Rules are the backbone of a fraud fighters tool set. At Sardine, we pre-package over 500 rules built to manage the most high-risk and sophisticated attacks, such as authorized push payment fraud, account takeover, and scams. The ability to quickly edit, A/B test, and integrate more data sources are crucial to be able to adapt faster when fraud patterns change.

Yet, even with the combined forces of AI, ML, and rule-based systems, one more critical component is necessary for a robust and adaptable fraud detection strategy: the human element.

Humans in the Loop: The Value of Adaptive Intelligence

Even the most sophisticated AI and rules-based systems are not infallible. They can sometimes flag false positives or miss new, complex forms of fraud. Here, the intuitive, creative, and adaptable human mind adds vital value.

The best fraud squads keep "humans in the loop." These teams continually adjust the rules, reacting swiftly to market changes. They provide the creativity and experience that complements the predictive powers of AI and ML, creating a balanced and flexible approach to fraud detection.

At Sardine, We Have the Trifecta

At Sardine, we are acutely aware of the importance of this balanced approach. We have an in-house fraud squad that works closely with our data scientists. This team continually backtests all rules and ML models and uses data to drive decisions.

Most risk problems are data science problems.

Our approach goes beyond just analyzing the data. It's about blending advanced technologies with human expertise to create a robust, adaptable system that evolves with fraud patterns.

We drive to have

  1. The best AI models that are constantly updated and consumable as you see fit
  2. The most flexible and adaptable rules and rule engine
  3. The human support that acts as an extension of your team

If that’s the support you need, why not contact us?

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About the author
Soups Ranjan
Co-Founder, CEO