The pandemic and the resulting increase in e-commerce has led to a surge in fraud, forcing businesses to reevaluate their perception of their fraud teams. Previously, fraud teams were seen as obstacles to sales, but now, they are seen as crucial for enabling revenue. This shift in perception has allowed fraud teams to be more involved in new initiatives and decisions.
The new awareness
The increase in online fraud during the pandemic has led to a greater awareness of the issue among businesses. Over half of fraud and payment professionals reported an increase in awareness in 2021, and global losses from online payment fraud are estimated to be around $20 billion. Some experts predict that a 15-20% increase in traffic can lead to a 2-5% increase in fraudulent activity. This has led to a greater emphasis on fraud prevention, with fraud teams working more closely with other departments such as product management, marketing, and compliance.
The shift in business strategy
The increased awareness of fraud has led to a shift in the perception of fraud teams, with many now receiving recognition from business leaders. In particular, senior roles are more likely to have seen an improvement in perception. In 2020, 75% of C-level executives reported an improvement, and this rose to 85% in 2021, with nearly 90% of CFOs and CROs seeing a change. This has led to a better working relationship between the fraud team and other departments, with teams seeking input from the fraud team before launching new products or payment methods. The role of the fraud team has expanded beyond simply "patching up holes" to prevent fraud.
Companies are increasingly recognizing the value of their fraud teams and are investing more in them. In 2021, around half of merchants said their budget for preventing fraud had increased, and more than 75% predicted that their fraud budget would increase in 2022. This trend is expected to continue, with losses from online payment fraud projected to exceed $25 billion in 2024. As a result, fraud teams are growing, with 86% of merchants having a team of six or more people in 2021, compared to 78% the previous year. CFOs have also been hiring digitally-specialized and crisis-management-savvy employees since the start of the pandemic. Empowering the fraud team is crucial for the success of any business.
Keeping the momentum
To maintain the newfound recognition and support for the fraud team, it is important to communicate the value of their work in terms that are relevant to the wider business. This can be done by framing data in terms of revenue lost, mapping initiatives to company goals, and using visual tools like graph networks to explain complex concepts. Reporting on key performance indicators and objectives can also help to build exposure for the fraud team within the organization. By highlighting the amount of money that can be saved and recovered through effective fraud prevention, the fraud team can demonstrate its value to the company and maintain its important role in decision-making.
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