Fraud score is a measurement of the riskiness of a transaction or customer based on a set of fraud rules and indicators. It helps businesses to spot suspicious activity and take the right action at the time of a transaction or at registration, login, or buying stage.
The benefit of fraud scoring is in its ability to scale: it lets businesses automate the process of evaluating transactions, and can help them avoid chargebacks caused by fraudulent purchases. The risk rating is based on factors like the type of product, dollar value, or location of purchase, the device used to make the transaction and more.
Generally, the higher the fraud score, the more suspicious the transaction is deemed to be. If a fraudulent purchase is identified, the merchant can choose to decline the order, or can initiate further investigation and even block an account if necessary.
Understanding Fraud Scores: How They Help Mitigate Risk
However, the biggest challenge with fraud scoring is that it can be overloaded with false positives, when a detection system incorrectly accuses legitimate transactions of being fraudulent. To counter this, it’s crucial for business owners to understand the rules and algorithms that are governing their fraud score and regularly review and test them to identify any weaknesses.
The SEON platform allows users to easily customize their risk scores and the rules that govern them – adding or removing different criteria, or altering how they impact the score (for instance, setting the number of points to be given to data center IPs). It also gives a glimpse into what is happening behind the scenes and why a specific rule might be applied.