Gilit Saporta - Practical Fraud Prevention: Fraud and AML Analytics for Fintech and eCommerce, using SQL and Python

• 2022-03-16: First Release

Very few people who identify as fraud fighters in the digital world began their careers with the intention of fighting fraud. Apart from one or two universities around the world, there isnt a standard course of study or a major that will prepare a young person for what they need to understand in the real world of identifying cybercrime. And until now, there hasnt been a book that provides practical knowledge or advice on how to get started or refine current strategies. Most of us learned our craft through on-the-job training and continual trial and error. As such, the need for a training manual of foundational knowledge across the various sectors of our emerging industry is very real.

Billions of dollars are lost to online payment fraud annually, often without much recourse for victim companies. This makes it critically important to identify suspicious and fraudulent behavior in advance, prior to bad actors committing the crime. Those outside this niche industry may assume that fraudulent orders or accounts present themselves in red blinking lights, or some other obvious form. The truth is that bad actors have the sole intention of having their online activity blend in with that of legitimate users. It is our job as fraud fighters to home in on the anomalies of their information, devices, and human behavior to identify risk indicators.

To add to the challenge (but also the fun), there is no one way to identify risky activity across multiple business models, verticals, price points, consumer bases, and so on. However, there are common behavior patterns and risk indicators that multiple companies will experience. Moreover, companies with similar business models, price points, and so forth are likely facing the same bad actors as their competitors.

That is why sharing information within the larger fraud prevention industry is so valuable and necessary. Over my career, I have had the immense privilege of introducing some of the biggest companies fraud teams to one another. Whether they worked for big-box stores, online gaming companies, online travel agencies, or retailers, it was an honor to make these introductions and facilitate these conversations. The fraud teams know that while their brands may compete against each other, they cannot, because failing to work together against common enemies could be detrimental to their organization and its bottom line. When I get the opportunity to facilitate fraud-focused conversations among companies that would traditionally be competitors, there is a common understanding that the shared enemy is important enough to warrant allying with one another. Because we rally together for a common cause, the community within our industry is strong. It is because of this level of collaboration and information sharing that we have made strides in technology and strategic process improvements.

This book is another form of collaboration within the industry. The authors worked with many experts in the field, and they themselves are brilliant in the world of fraud prevention. As cyber fraud continues to grow and technology innovation continues to bring more opportunities for fraud, it is more important than ever to work together and learn what we can from one another.

Ive lost count of the numerous occasions over the past decade that someone asked me to recommend a book exactly like this one. Some wanted to train new fraud fighters or learn more about a specific type of fraud or industry. Some were looking to move from banking to ecommerce, or vice versa, and wanted to prepare by learning about the similarities and differences between these fields. Others were highly experienced fraud fighters looking to expand their depth of knowledge. Ive even had people ask because theyre looking for a source they can share with other departments as a way to introduce them to the complexities of fraud prevention and how it impacts users as well as other elements of the organization.

Its a pleasure to see that this book finally exists. The bad actors are successful because they work together and share both information and a broader understanding of their field. Its imperative that we do the same.

Karisse Hendrick, founder and principal consultant at Chargelytics Consulting and host of the popular Fraudology podcast

Preface

With commerce comes fraud, wrote Airbnb cofounder Nathan Blecharczyk back in 2010, and its safe to say that the maxim has proven itself over and over in the years since then.).

Figure P-1. Twenty years of internet crime complaints from the IC3

Fraud fighters, with their heads down in the data, excel at identifying new suspicious patterns and tracking down perpetrators. The constant pressure of fraud prevention means that often, day-to-day activities prevent fraud fighters from taking a breath, putting their head above the parapet, and looking around to see whats happening outside their company or their industry. The purpose of this book is to provide a wider and more strategic perspective as well as hands-on tips and advice.

During our time in fraud prevention, we have been privileged to have the chance to talk to and see data and trends from a wide range of merchants and organizations. Its that breadth that we want to share in this book.