Benefits of Data & Risk Hubs.

The Paypers has interviewed us to learn about the importance of orchestration hubs with smart customer verification for an optimum global risk mitigation strategy.

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The Benefits of Picking up Data and Risk Orchestration Hubs to Mitigate Fraud.
Released October 27, 2021. View Article On The Paypers


In 2016, 4Stop was founded to allow businesses to spot and prevent fraud, while optimising their risk management strategies. How has the company evolved so far?

Supporting online entities with leading data and anti-fraud technologies to streamline risk mitigation operations while combatting top fraud concerns is a vision of 4Stop to uphold. Initially the 4Stop platform solely focused on KYC data services and risk mitigation tools. Since its founding it has evolved to be now one of the world’s largest anti-fraud and data orchestration hubs - with over 150 data services encompassing 2000+ data sources and advanced proprietary technology to establish a modern Know Your Customer (KYC), Know Your Business (KYB), compliance and anti-fraud marketplace. Businesses instantly solve their risk-based approach through a white-labelled experience, the 4Stop cloud platform or the API endpoint.



The current pandemic has shown how quickly criminals are able to invent new scams and re-purpose old ones. Where are some of the key trends that merchants are facing in a post pandemic world when it comes to new volumes of on boarding and KYC processes?

The pandemic has utterly shaken the core of our global economic landscape; however, it has driven technological advancements many years ahead of its time. Throughout the pandemic globally, we have seen a 22.3% increase in internet users with a 40.3% increase in online traffic. On average, 1 million new internet users onboard each day, with internet users making up 59% of our global population. Our online payment ecosystem, in correlation, has experienced an uptake where online sales increased by 52% compared with the same time frame a year ago, with an increase of 8.8% in online shoppers. Italy has seen a tremendous spike in online sales, increasing by 90%, and in the US, mobile shopping has increased by 7.7%. Additionally, fintech users have grown 25% from two years ago. Our digital world is rapidly surging, with many markets obtaining growth rates they did not anticipate pre-pandemic for many years.

With all the digital engagement growth and its associated transactional volumes, another black box is evident, bringing forth an increased vulnerability to cybercrime – both for businesses and consumers. Many marketplaces utilise digital channels and have opted for digital verification and identification methods. However, many may not have integrated additional KYC to obtain premium fraud defence to handle the surge of onboarding and transactional volumes recently experienced. Furthermore, business operations have dramatically shifted with people working remotely, making it more challenging to efficiently manage data security, risk screening, and transactional monitoring.

In a survey report, 22% of Americans experienced digital fraud related to COVID-19. In correlation, the UK National Fraud & Cyber Security Center stated a fraud report increase of 400%, and in 2021 it is expected businesses will fall victim to fraud every 11 seconds, an increase of 21.4% from two years ago.

In 2019, cybercrime-related costs surpassed USD 2 trillion globally and expected to grow to USD 6 trillion by the end of the year, representing the most significant transfer of economic wealth in history. Frauds year-over-year losses climbed to more than USD 3.3 billion in 2020 from USD 1.8 billion a year earlier. These factors make a prominent need for businesses globally to rethink their strategy, sync with leading data and anti-fraud technology developments and adapt their risk mitigation mantras for future-proofed sustainability. Leveraging risk and data orchestration hubs can be a stand-alone end-to-end solution or a compliment if you've already established an in-house fraud solution.



ATO fraud, or the ‘fraudster's weapon of choice’, rose 282% between 2019 and 2020. Next in line come application fraud, identity theft and bust out fraud. How to combat these three dark nights of fraud with multilevel KYC and dynamic anti-fraud solutions?

As our digital world continues its evolution, the data businesses and consumers upload to the web are increasingly exposed. Each consumer's personal information, such as social security numbers, credit card numbers and other critical individual identity factors, now resides on thousands of servers across the globe – increasing the risk and exposure in identity theft. In 2020, Javelin Research reported that 40% of takeovers happen within 24 hours of a criminal's access to a victim's account.

If we start with Device intelligence – which is at the heart of any online engagement – a business can turn the user's device into a possession factor. Machine learning instantly recognises any online device and understands its behaviour, reputation, risk and anomalies, and any device associations. Regardless of fraudsters techniques to disguise their devices to evade device recognition many additional factors drive subsequent authentication across device velocity, evidence, anomaly, age-based, geo-location, and risk profile.

Paired with multi-level KYC data verifications at the point of onboarding, transactions or any engagement touchpoint enables segments of data to be verified across multiple data providers, to obtain confidence in the generated risk analysis score, a data-rich customer profile, and trustworthy risk-factor baseline.

In a recent case study by 4Stop, when applying a multi-level KYC alert distribution increased by 72%, bust-out fraud reduced by 74.5% versus baseline and authorisation rates increased by 81%.

Account Takeover Fraud
  • Government-issued document identity scanning combined with selfie capture;
  • Two-factor Authentication and Knowledge-Based Questions;
  • Triggered alerts on account information changes such as new phone, email, additional mailing address added, etc.;
  • Advanced transactional monitoring techniques to identify abnormal transaction patterns or payment behaviours.

Application Fraud
  • Government-issued document identity scanning combined with selfie capture;
  • Biometrics to evaluate interaction between form and application;
  • Ability to quarantine / throttle accounts and limit service usage until score confidence is further established.

Identity Based Fraud
  • Any additional verification from government-issued document identity scanning combined with selfie capture to two-factor-authentication, biometrics and more brings a more tangible digital identity to ensure safe transactions.

Bust-Out Fraud
  • Identity verification with selfie capture combined with two-factor authentication and biometrics;
  • Advanced dynamic anti-fraud thresholds to identity abnormally high and increased deviance changes in transaction volume and behaviour;
  • On-going transaction capacity evaluation, review decline codes, debit vs credit patterns etc.



How the industry will make the application and KYC process easier today and, in the future? (How can they best leverage and improve automated KYC)?

Companies experience the challenge of collecting internal data to feed analytics effectively. As a result, they experience real-time payment fraud, false positives, and high customer friction. However, for many entities, implementing additional anti-fraud platforms, dynamic technology, KYB and KYC authentication and data services above the requirement for compliance is costly and cumbersome.

The solution is to simplify the data and risk operations regardless of business size, region or market through data and risk orchestration hubs. A report by Aite Group shows that almost 36% of financial institutions are picking up data and risk orchestration hubs to mitigate fraud and optimise their detection while improving customer services. Orchestration hubs instantly sync businesses with a substantial amount of KYB, KYC data services, anti-fraud technology and compliance - packaged up in one platform, one API integration.

Businesses select what services they need, where they need them and instantly apply through a white-labelled experience, a cloud platform or solely API. Eliminating the need to manage multiple third-party data providers with associated contracts and fees, drain on development resources, time to market or cumbersome processes staying current with regulatory requirements.



What are the best practices to recommend that merchants are implementing today to keep their businesses and customers safe?

The latest landscape and online engagement evolution have proven, it’s imperative to sync with leading technology providers and adapt risk mitigation methods to obtain the agility and future-proofed sustainability required.

Businesses should be keen to enrich their fraud prevention strategies with industry-specific fraud reports and advanced capabilities including customisation, case management, customised workflows, and anti-fraud for various regulatory or fraud prevention requirements.

Business intelligence and insights are essential. Expanding customer profiles and utilising a fraud prevention platform with granular comprehension enables quantifiable decisions backed by data, improve operations, reduce cost, and confidently manage risk and compliance. As well, utilising the data obtained to improve conversions and improve retention and penetration strategies.

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