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Fraud Prevention – Everything you need to know

Fraud Prevention – Everything you need to know

Reduce risks with the best fraud prevention methods

Unfortunately, criminal practices have been frequented due to the popularization of online shopping. Learn how to protect your information and money with the help of the tips in this article.

Fraud prevention is of great importance today due to constant data thefts, invasions of privacy and fraudulent transactions. Unfortunately, these are some of the criminal practices that have been frequented due to the popularization of E-commerce.

Therefore, it is essential that you know in depth how to avoid being a victim of these fraudulent activities, whether you have an online business, run a company or make purchases online.

Learn how to protect your information and money with the help of some tips in this article.

What is & how does fraud prevention works?

In the first place, the term "fraud prevention" does not respond to a single method, but rather encompasses all practices aimed at preventing and reducing the risk of fraud. In this it differs from fraud detection, since the latter focuses on thwarting them once they are occurring.

This is not why we should think that both strategies work separately or for different purposes, in fact, it is quite the opposite: both complement each other to offer better results. Both have the same purpose, that is, to annul fraud and protect users.

Fraud prevention and detection attacks fraudulent activity from its earliest stages to its most advanced, where the crime is taking place. In this way, it is possible to maximize the results and reduce the risk within the company or digital business.

And secondly, there are many methods to prevent fraud, each depending on:

  • Fraudulent activity to prevent
  • The niche or sector to which the organization applying the method belongs
  • Who could be harmed?
  • And who could be the fraudsters

But before knowing the methods and how to apply them, you need to know which fraudster you could be the target of and what type of fraud you are exposed to. And it is precisely this that brings us to the next point.


As we said before, fraud is becoming more common and this in turn implies the evolution of strategies and procedures carried out by fraudsters. This has caused the types of fraud to increase in number and also their respective preventions.

We can divide the types of fraud into the following 2 broad categories:

  1. DIGITAL FRAUDS. They are all those fraudulent activities carried out by digital means in cyberspace, such as the Internet and other media such as digital applications. Digital fraud is characterized by being the most frequent, the most complex and for being in constant evolution.
  2. noT digital FRAUDS. those that are carried out without digital media as a basis and, therefore, are more common in companies within the logistics, manufacturing, food sectors and sometimes in the banking sector.

You must bear in mind that the same fraud prevention method does not apply to all cases or sectors. Mainly because there are many types of fraud, although several are related to politics, legal proceedings and tax issues.

This time we will focus on the most frequent, mainly those aimed at electronic businesses and users.


Digital fraud tends to be even more frequent when they are directed at digital businesses. Mainly because there are numerous crimes that are successfully carried out once the opportunity to circumvent the system to take advantage of the trade is known.

Fraud prevention in digital businesses is also different from that used within companies, since hundreds of transactions must be monitored constantly and in real time. This makes manual monitoring of transactions difficult, since as the business grows, more transactions will need to be monitored.

Unfortunately, there are many methods fraudsters use to take advantage of vulnerable e-merchants, often involving real customers. Some examples of fraud within electronic commerce are the following:

  • PROVED Fraud
  • datA THEFT

These are some of the most common problems, although other very important ones such as “false positives” are not included in the list because they are not classified as fraud. The false positive refers to those transactions that were classified as risky, when they were really safe.


As for fraud where customers and common users are harmed (not necessarily responsible for E-commerces or companies), fraud also abounds. The fraudster often contacts their target via email, text messages, and even phone calls.

These contacts encourage the user to click on a link, fill out a form, provide their personal information or download some malicious content. They achieve this by posing as a trusted entity in order to "fish" for the user's private information, such as their passwords, personal information, bank accounts, etc.

Some of the most common digital frauds targeting customers are the following:


Fraud prevention methods aimed at users vary and do not usually include anti-fraud software as in the case of E-commerces. Some measures are very effective, however, it is better to know the most effective methods today to prevent any of the aforementioned frauds.

the 4 most effective sets of methods for fraud prevention

Below you will be able to learn about the most effective fraud prevention methods at present and in which cases it is more appropriate to use them.


In this case, the methods comprise a series of joint actions to maximize preventive results. Let us remember that fraud is made up of 3 pillars:

  • OportuniTY. is the weakness in the security system found by the potential fraudster.
  • MotivaTION. is the personal cause or incentives that the fraudster has and that impel him to commit said crime.
  • RaTionalizaTIOn. is the justification that the fraudster makes to convince himself that he must commit the fraud.

Based on this information, you need to establish methods that hinder the fraudster, mainly in the Opportunity pillar. In this way, the security gap would be eliminated and the risk of fraud within the company would be greatly reduced.

On the other hand, you can also make use of staff training and analysis to deter potential fraudsters in their Rationalization stage. Some of the actions and strategies that comprise this set of methods are the following:

  • Implementation of internal and external audits for fraud management
  • Segregation of positions and responsibilities related to internal control for the prevention of fraud
  • Analysis and constant monitoring of the most outstanding fraud risks
  • constant monitoring of the most outstanding fraud risks
  • Constant evaluation of fraud patterns
  • Formalization of financial processes within the company
  • Establishment of labor policies and standards
  • Training and ethical training of staff
  • Automated expense control
  • Multiple verification of reports, invoices, investments and other expenses


They are software aimed at detecting and preventing fraud in its initial stages, analyzing and monitoring transactions and potential customers. They are also characterized by being managed with artificial intelligence and having an automatic learning system (machine learning), so that they adapt to changing fraud patterns.

They act quickly and greatly reduce risks and monetary losses, thus becoming the best tools to prevent fraud in E-commerces. This allows platforms to better protect themselves and their customers.

Unfortunately, this mission has been greatly affected by the lack of collaboration between companies that receive transactions and payments online.

Using single anti-fraud tools does not allow for collective learning and greatly exposes merchants as the fraudsters are often the same people. This implies that their action patterns are repeated, but always attacking different platforms and businesses.

At Bayonet we have designed a machine learning model that makes use of collective data intelligence to effectively protect its entire customer network and meet this and many other needs in the anti-fraud market. If you want to know more, you can schedule a demo or contact us at

With that said, let's move on to the third method.


As an alternative to using anti-fraud tools and software, you may find it helpful to create a separate process to maximize results. Although most of the functions in this process are easily fulfilled by anti-fraud tools, this method is still an option to be quoted.

Either way you would be insuring yourself, your business and your customers. Here you can see some tips to elaborate that process:

  • Collect as much data as possible from your payment processor, your platform and get rid of useless data
  • Establishes indicators in the risk area
  • Constantly review the data and identify patterns in each case of fraud
  • Prepare a quick review process of the data of each potential client
  • Constantly investigate fraud, its patterns and behavior
  • Raise the level of security and prepare for mass purchase dates such as Christmas, Good End and Hot Sale
  • Do not trust 100% of the fraud patterns in other sectors, since it varies according to the niche, the country, the date and the electronic commerce itself.


In this section you will see a series of tips for the prevention of bank fraud. Whether you make purchases online or not, fraudsters are always casting the “bait” and waiting for someone to “bit”.

Nobody wants to be that unsuspecting victim and therefore it is better to take some precautions. Here are some tips:

  • Make secure payments through popular and reliable payment networks such as PayPal, Mercado de Pago, etc.
  • Do not buy anything, accept free samples or make payments in unreliable or disreputable E-commerces.
  • Carry out in-depth research before buying, both of the product or service to be purchased such as from the online store where you will obtain it.
  • Be careful with “urgent notices” or “emergency” emails where they encourage you to click somewhere, download information or pay something.
  • Do not give your private data (passwords, bank accounts, profiles, etc.) to anyone you haven't trusted in a long time.
  • KEEP ALERT for strange URLs, poorly edited images, spelling errors, and other warning signs in emails or pages that prompt you to do something wrong. compromising action.
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Today, fighting digital fraud is a daily task that concerns us all, both to protect ourselves and our customers. This is the case of the aforementioned fraud prevention tools, the best alternatives for E-commerce and Fintech.

However, fraud is not only limited to digital commerce, but also encompasses business activities and common users. Therefore, the best advice in this case is to always stay vigilant.

Fraud evolves, acquires patterns, develops better hooks, better malware and takes advantage of trends. Fraudsters always gain experience and stay active, so why shouldn't you do the same?