Fraud Reduction Intelligence Platforms

Fraud is a rapidly growing, cross-industry problem amplified by the Covid pandemic, driven by expanding online services that “trade in monetary equivalents” and by attackers shifting to weaker targets as banking and finance harden defenses. The most prevalent enterprise and government fraud patterns are Account Takeover (ATO), where stolen credentials and credential stuffing enable unauthorized transactions, and New Account Fraud (NAF)/Account Opening fraud, where stolen or assembled PII is used to create synthetic identities for promotions, instant loans, or mule accounts. Additional fraud patterns include SIM swap (social engineering or insider manipulation of MNO databases), insider theft of funds or intellectual property, screen scraping, inventory skimming by bots, fraudulent insurance claims and real-estate escrow misdirects using captured agent credentials, and mobile “overlay” malware that imitates legitimate banking or travel login screens.

Mitigation increasingly depends on real-time risk analytics and decisioning. Risk-based MFA reduces ATO by evaluating credential intelligence, device intelligence, user behavioral analysis, passive/behavioral biometrics, and bot signals; identity proofing and vetting at registration and authentication help reduce NAF and synthetic fraud. These controls work best when informed by Fraud Reduction Intelligence Platforms (FRIPs), which aggregate and operationalize up to six core capabilities: identity proofing/vetting, credential intelligence, device intelligence, user behavioral analysis, behavioral biometrics, and bot detection/management. The FRIP market is mature, largely SaaS-delivered, commonly priced per transaction volume, and diverse: vendors differ in depth across functions and in their targeted segments (pure financial fraud vs. broader industry use). Leadership ratings highlight major vendors across Overall, Product, Innovation, and Market categories, with IBM leading Overall, and strong roles for Experian, Transmit Security, OneSpan, BioCatch, Broadcom, and others.

• Cybercrime costs are estimated to reach $10.5 trillion by 2025.
• Account Takeover Fraud can involve credential stuffing, malware (man-in-the-middle and man-in-the-browser), and Remote Access Tools delivered via Trojans or social engineering.
• New Account Fraud can use stolen identities or assembled PII to create synthetic digital IDs that are harder to detect than ATO.
• Educational, financial, and medical records can be sources of PII used to assemble fake accounts.
• SIM swap fraud occurs when MNO records are manipulated to map a victim’s phone number to a fraudster’s SIM.
• Inventory skimming or depletion is largely perpetrated by bots that buy retailer inventory to re-sell.
• Real estate escrow misdirect schemes often lead victims to transfer down payments that are usually unrecoverable.
• FRIPs commonly provide six major functions: identity proofing, credential intelligence, device intelligence, user behavioral analysis, behavioral/passive biometrics, and bot detection/management.
• FRIP solutions are generally delivered as SaaS and often priced per transaction volume.
• IBM holds the highest position in the Overall Leadership rating for FRIPs in this report iteration.

• “Fraud has been exacerbated by the Covid pandemic.”
• “Fraudsters attack any potentially lucrative target of opportunity.”
• “Fraud perpetrators also continually diversifying and innovating their Tactics, Techniques, and Procedures (TTPs).”
• “Risk-based Multi-Factor Authentication (MFA) can eliminate a substantial portion of ATOs by increasing authentication assurance levels.”
• “Risk-based MFA often evaluates credential intelligence, device intelligence, user behavioral analytics, and behavioral/passive biometrics.”
• “Risk-based MFA and transaction processing solutions operate optimally when integrated with or informed by Fraud Reduction Intelligence Platforms (FRIPs).”
• “Basic bot detection is a requirement for FRIP, but advanced bot management… is an innovative discriminator.”
• “Solutions are generally offered as SaaS.”
• “The Fraud Reduction Intelligence Platform market is mature and growing.”
• “Selecting a vendor… must not only be based on the information provided in a KuppingerCole Leadership Compass.”