The Growing Threat of Fraud and How to Prevent It: with Fraud Analyst Asyet Argynbai


The Growing Threat of Fraud and How to Prevent It: with Fraud Analyst Asyet Argynbai


The Growing Threat of Fraud and How to Prevent It: with Fraud Analyst Asyet Argynbai

Jul 21, 2023

On our new Fraud Technology Podcast, our Ravi Madavaram recently sat down with fraud analyst and data enthusiast Asyet Argynbai from Strike Acceptance.

Today, Asyet uses SQL, queries, and data analysis to fight fraud as a fraud analyst. During his time living in New York, he was unfortunately exposed to the other side of fraud.

While living in a low income neighborhood, he overheard people talking about committing fraud. With computers and the ability to buy identities online, many people turn to fraud to get by because it is safer and easier than other methods like selling drugs. Asyet couldn’t do much at the time as a working student, but he saw how widespread the problem was.

So, as Asyet advanced in his career, he started realizing that something could be done about it, but many companies were not properly preventing or fighting fraud. During the pandemic and the increase of work-from-home culture, he read a lot about PPP fraud and how fraud was growing. As he gained interest in fraud prevention, he also realized how complex it can be to stop it. But just because fraud prevention is a complicated challenge, doesn’t mean that we should ignore it. Asyet is not deterred and works hard every day to improve fraud prevention technology.

On the podcast, Ravi and Asyet discussed the rapid growth of fraud, what factors are driving this growth in fraud, and how fraud prevention professionals like him are continuously fighting these trends.

You can listen to the podcast episode here or keep reading for the highlights from the discussion with Asyet.

How Has the Fraud Landscape Changed in Recent Years?

For many years, the most common thing that fraudsters will do is acquire someone’s credit card information or identity to steal. That fraud strategy has remained constant and will likely remain.

However, companies have made it harder to commit fraud in recent years by implementing scorecards and other prevention technologies that make it easy to identify and flag suspicious behavior.

As companies have made it harder to commit fraud, fraudsters have also gotten better at figuring out how these systems work and how to outsmart or avoid them. It is a bit of a fast-paced, never-ending cat-and-mouse game.

Since fraud has gotten harder to pull off successfully, there has been a decrease in opportunistic fraud and an increase in organized, well-funded fraud.

In other words, it is harder for average people to stumble across serendipitous opportunities to commit fraud. Instead, it requires a very dedicated team of people to pull it off. These will only be the top 1% of people, and that is who companies need to focus their energy on combatting.

What Factors Should Companies Consider When Building Their Fraud Prevention Teams and Systems?

First, companies need to consider fraud when they are structuring their organization. For example, companies typically have a sales team and a fraud prevention team under the same umbrella. This is a problem because these two teams are at direct odds with each other.

 On the one hand, the fraud prevention team’s role is to mitigate fraud losses for the company, which can mean canceling deals. On the other hand, the sales team’s role is to sell as much as possible and meet their sales quotas.

 In some cases, it can seem like these two teams are in direct competition. If a seemingly great deal is approved, the sales team will reach their goals and maybe even qualify for big bonuses or other benefits from that deal. If it turns out to be fraud, the fraud prevention team will have to be the one to mitigate that loss and seemingly be the reason the deal doesn’t go through, and the sales team doesn’t meet their milestones.

This can create a conflict of interest and inefficiencies and clash between departments. Your boss on the sales team is not going to give you a favorable performance review if it seems like you rejected a lot of good deals and lost the team money.

To avoid this conflict of interest, it is important to designate a separate fraud prevention or risk team that is not under the sales team. It can get tricky when you put the fraud prevention team under the sales umbrella, like many companies do. Fraud is a function of risk, not sales.

Second, companies rely heavily on data. All decisions must be backed by data and proof. The issue with this is that it makes it hard to be proactive and take preventative measures before fraud instances actually happen, since it is just a predictive model and not hard proof.

This creates a large disconnect between fraud risk teams and senior executives in the company. It can be hard to convince executives to adjust their business when something hasn’t happened yet. Therefore, fraud prevention tends to be very reactive rather than proactive, which can be less than ideal for the company. 

How Do You Catch Fraud Cases Early?

Different companies deal with different customer types and sales volumes. Depending on your company's industry and the size of its accounts, the volumes of fraud your prevention team handles will vary greatly.

If your sales funnel includes an onboarding stage, this is a great place to prevent fraud. Focus on onboarding first and foremost, and you’ll be able to detect bad customers.

Regardless of the industry or the product you sell, fraudsters share very similar MOs. If they are using a stolen identity to purchase your product or service, they will ghost during the onboarding stage and be easily identifiable.

What Types of Fraud are Most Prevalent?

Many industry experts would agree that the most prevalent type of fraud is identity fraud. This is because it is so easy to execute identity fraud in today’s world where there is so much personally identifying information available online.

For example, look at some of the largest identity breaches, like T-Mobile. T-Mobile had a huge database breach the included clients’ personal identifiable information, such as their social security numbers. This data was likely resold on the dark web or in other marketplaces.

Many large companies are vulnerable to breaches like this that make it easy for today’s fraudsters to buy and sell personal information to use for fraud.

For fintech and other financial institutions, their main role in fraud prevention is to identify the real customer and verify their identity.


What Technologies are Used to Prevent Fraud?

The key decision in a suspected fraud instance is to accurately verify if the person making the deal is the customer or someone impersonating the customer. There are a couple common approaches to this.

We won’t go into detail here, as some information is better left confidential when it comes to fraud prevention.

But essentially, companies build large datasets that they can use to classify customers and spending activities into categories, ranging from less risky to more risky, or needs review. They create systems of scorecards based on this data. In recent years, the data on fraud prevention has gone through great improvements that enable companies to make very fast decisions around whether the customer is real or fraudulent.

Trends: Is Fraud On the Rise?

A 2022 report from the FTC reported that fraud is growing, and it is growing quite rapidly. The report started that fraud is growing about 50% per year. With all of these new fraud prevention technologies and innovative solutions, why is fraud rising so rapidly?

The reason is the market. The supply and demand for fraud prevention companies has increased significantly. This is because it is so easy to access personal information online that anyone can steal your information. There are also many resources online and on social media that go through the steps and help people learn how to steal information and commit fraud. Some people run social media accounts, sell eBooks, and even write song lyrics around how to become a fraudster.

To some people without many opportunities, fraud can seem like an appealing lifestyle. Whereas in years past these people might turn to selling drugs to make money, sitting behind a computer screen and committing fraud online is a much easier and safer alternative.

But of course, fraud is wrong and most people who try it do get caught because today’s protections and prevention techniques are very good.

What Skills Does a Fraud Analyst Need to Stop Fraud?

A good fraud analyst should have a strong background in data analysis and skillsets such as SQL and Excel. Furthermore, a good fraud analyst should have a strong storytelling ability with data. The key is understanding what exactly each data point is doing. Which ones are helpful for identifying fraud? Which ones can be ignored? How does all the data work together?

A good fraud analyst should also have a strong understanding of the business and industry in which they work. For example, a car loan company, a mortgage company, and an insurance company would all operate differently, and fraud would look different within those fields. Try to get inside the mind of a fraudster and how they would do things so that you can be one step ahead. Understand how fraud works, why people do it, where they get their information, and what they can do with the information.

What Does the Future of Fraud Prevention Look Like?

Fraud will likely continue to grow rapidly because of the availability of information and resources available online. It is easy to get your hands on people’s personal information and that won’t change any time soon. While fraud is easy to do and therefore growing rapidly, the technology to fight and prevent it is also growing rapidly. Therefore, people will continue to get caught. Therefore, there is also a bright future for fraud prevention companies and technologies and that industry will continue to grow rapidly.

Learn About Fraud Prevention

If you want to learn more about fraud prevention trends and technology from fraud analyst Asyet, watch or listen to our podcast episode on this topic and be sure to subscribe to our channels.

You can also follow our company, Regulo, on LinkedIn.

A better way to fight financial crime and compliance

© 2023 Regulo, Inc all rights reserved

A better way to fight financial crime and compliance

© 2023 Regulo, Inc all rights reserved

A better way to fight financial crime and compliance

© 2023 Regulo, Inc all rights reserved