The fraud landscape is evolving, with fraudsters becoming more sophisticated — operating in organized groups and employing sophisticated tactics to target businesses and individual consumers. The definitions of fraud prevention and cybersecurity can aid in understanding how the two areas can be used as strategies to help reduce losses related to fraud and protect Canadian consumers and businesses. 

 

What is the difference between fraud prevention and cybersecurity?

 

Fraud prevention outlines strategies that safeguard consumers against fraudulent acts such as unauthorized transactions, identity theft, and other forms of financial crime. The aim of fraud prevention is to protect the data of consumers and businesses. Cybersecurity plays a vital role in helping prevent fraud by looking at risks beyond financial crimes and applying a holistic view (i.e., protecting the organization and its assets such as technology infrastructure). The responsibility lies with the custodians of the data to have the appropriate security controls and protections in place so that fraud can be reduced and prevented. Ultimately, both fields have the same broader goal of reducing loss and mitigating harm. 
 

Why are fraud and cybersecurity coming together when they’ve traditionally been seen as different structures? 

 

Fraud prevention and cybersecurity are becoming more intertwined, not just because both are focused on mitigating harm (whether it be to a consumer, a business or an organization), but because financial criminals often operate indiscriminately in both arenas. For instance, when a company possesses sensitive consumer data but lacks the appropriate controls for safeguarding it, the data becomes vulnerable to being stolen and sold to bad actors who can then engage in fraudulent activities against the consumers or organization. 

Cybersecurity and fraud teams tend to respond differently to these types of incidents. Cybersecurity focuses more on preventing and containing an incident as well as engaging the right internal teams, while the fraud side directs attention to the consumer by offering support such as credit report checks or fraud alerts to help mitigate further harm. Organizations are beginning to realize the importance of addressing both the cybersecurity and fraud concerns in order to reduce losses related to fraud. 

 

What benefits can result from organizations bringing fraud and cybersecurity closer together?

 

Three of the central benefits that organizations can gain from bringing their fraud and cybersecurity functions closer together include:

• Harm reduction: The main benefit is significantly reducing harm to consumers and businesses caused by fraud or a cybersecurity breach. 

• Better resource collaboration: Organizations may be able to leverage the same tools, processes, and resources developed for cybersecurity to improve fraud prevention.

• Improved return on investment: With a unified approach to both aspects of security, organizations may be able to work more efficiently, redeploying skilled resources and budget to new initiatives.

 

How is generative AI impacting fraud and cybersecurity?

 

Generative AI is having both a positive and negative impact on fraud and cybersecurity. Bad actors can leverage generative AI to perpetrate fraud on a larger scale in a manner that is more difficult to identify and prevent. For example, generative AI can be used to search for flaws in security systems to facilitate attacks, or create new harmful code that can evade traditional security detections. However, generative AI can also be used to combat this nefarious activity by improving threat intelligence and simulate threats to proactively bolster defenses. It can also quickly analyze large datasets to detect suspicious and potentially harmful activity.

 

If you want to learn more about how understanding fraud prevention can help minimize risk and reduce loss due to fraud, please contact your Equifax Account Representative. You can reach us directly at 1-855-233-9226 and follow us on Twitter and LinkedIn. 

 

This article is published by Equifax Canada Co.® 2023. All rights reserved. No part of this article may be reproduced, copied or transmitted in any form or by any means, or stored in a retrieval system of any nature, without the prior permission of Equifax Canada Co. This article is for informational purposes only and is not intended to be legal or business advice. 

 

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FraudIQ Manager | ID Verification | AML Compliance