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Historically, banks and financial institutions were the primary targets for fraudsters. However, as digital channels become more prevalent, diverse customer-facing applications such as airlines, travel platforms, telcos and digital...
As technology evolves, so do the methods employed by cybercriminals. Online fraud has become increasingly sophisticated, with new tactics and strategies emerging at an alarming rate. A concerning development is the rise of fraud rings — sophisticated attacks that may mobilize multiple users, devices, IPs and other entities to perform fraud both in the real world and online.
Fraud rings pose a significant challenge for traditional security measures, since these different entities operate in a coordinated manner. This coordination allows them to exploit vulnerabilities with precision and scale their operations more effectively. Traditional security systems, which are typically designed to detect and prevent individual and/or known fraudulent activities, often struggle to identify and mitigate the collective actions of a fraud ring.
For online businesses, this represents a multifaceted threat. Fraud rings may not only cause direct financial losses but also erode customer trust and damage brand reputation. The complexity and scale of these activities are further aggravated in the web landscape, where one individual can create and orchestrate several accounts and/or users to perform large-scale fraud schemes. This blog post discusses how fraud rings work online and explains how Mosaic by Transmit Security provides a comprehensive solution to combat and prevent losses and reputational damage caused by these sophisticated cybercriminals.
A notorious example of a digital fraud ring operation is the case of the $24 million stolen identity tax refund fraud ring. The ringleader, sentenced to 15 years in prison, orchestrated a scheme where stolen identities were used to file fraudulent tax returns and claim refunds. This operation not only caused significant financial losses to the government but also impacted countless individuals whose identities were compromised. Such cases highlight the severe consequences of fraud rings and the importance of robust, out-of-the-box security measures to prevent similar incidents.
As fraud rings employ a wide range of methods and tactics, exploiting both real-world and digital vulnerabilities, these fraudsters can engage in activities such as Authorized Push Payment (APP) frauds, where victims are tricked into authorizing payments to criminals, or various types of online fraud, including phishing schemes, identity theft, money mules and orchestrated attacks.
The coordination and resourcefulness of fraud rings make them particularly difficult to combat with standard security tools. As mentioned, online fraud rings leverage sophisticated techniques to bypass traditional security measures: Malicious actors may build groups of fraudulent entities that are able to confuse most solutions available in the market. They create multiple accounts by mixing authentic and fake data; use a variety of IP addresses to bypass blocking lists; register different real and virtual devices — all to create intricate webs of fraudulent activities.
Traditional, isolated solutions such as Web Application Firewalls (WAFs) and bot management systems often fall short in detecting and preventing this kind of fraud. These tools are typically designed to address individual threats and may not be equipped to identify the collective and deceiving behavior of a fraud ring. Since fraudsters may use real data to create apparently legitimate users, they can slip past defenses that rely on static rules or signature-based detection.
Therefore, to effectively combat fraud rings, businesses need a holistic view of their systems combined with real-time analytics. This approach allows security teams to detect patterns and anomalies indicative of coordinated fraudulent activity. By monitoring user behavior, IP addresses, device activity and interactions across their entire ecosystem, organizations can identify accounts working in concert to perpetrate fraud. In this landscape, only the most advanced solutions that integrate machine learning and AI-powered behavioral metrics are able to discern the subtle indicators of fraud ring operations.
Transmit Security adopts a cutting-edge approach to identity management and fraud prevention. To address the rising problem of fraud rings, we bet on solutions and capabilities far beyond what other CIAM platforms are able to offer.
Up front, the Mosaic platform leverages advanced detection algorithms and machine learning (ML) to stay ahead of fraud rings. Our ever-evolving detection and response service continuously analyzes millions of user requests to identify patterns and anomalies indicative of fraudulent activities. By leveraging the power of ML, the system improves over time, learning from each detected fraud attempt and from each fraud confirmation or rejection to enhance its accuracy and effectiveness. This dynamic approach ensures that the platform can adapt to new fraud techniques as they emerge, providing robust protection against even the most sophisticated and complex fraud rings.
But our systems work far beyond mere detection. After detecting fraudulent activity, Transmit Security offers powerful post-detection capabilities and advanced response mechanisms to further enhance security, improve business outcomes and provide better CX. The platform works continuously with AI-powered analytics and ML to enrich the detection process, providing deeper insights into the nature and scope of frauds. Handling this information in an accurate, effective way is crucial for understanding the modus operandi (MO) used by fraud rings and for developing strategies to prevent future attacks.
Mosaic’s comprehensive analytics tools allow organizations to analyze historical data and identify trends that may indicate emerging threats with conversational queries and out-of-the-box insights. By leveraging this information, companies can refine their security measures and stay one step ahead of fraudsters. Additionally, the platform provides detailed reports and visualizations that help security teams communicate findings and make informed decisions, such as the much needed graph visualization.
Graph analysis is one of the most effective strategies for combating fraud rings. Graphs provide a visual representation of relationships between different entities, such as transactions and access data, making it easier to identify suspicious connections and patterns between devices, users, IPs, geolocations, etc. In the context of fraud detection, graphs can reveal complex networks of interactions that may be invisible to traditional analysis methods.
For example, by mapping out transaction histories and access points, Transmit Security can identify clusters of activity that suggest coordinated efforts by different accounts or even the same account using a suspicious number of devices or different geographical locations. These graphs highlight the connections between seemingly unrelated entities, allowing security teams to spot the central nodes of fraudulent activity. This not only helps in identifying fraud rings but also aids in understanding their methods of operation, enabling more targeted and effective countermeasures.
Furthermore, graph analysis facilitates the detection of synthetic identities and compromised accounts by visualizing the flow of data and transactions across the network. By examining the intricacies of these connections, Transmit Security can pinpoint the origin of fraudulent activities and take proactive measures to mitigate risks.
Finally, to ensure timely intervention, our platform provides real-time alerts and push notifications to our customers. When suspicious activity is detected, the platform immediately notifies the relevant stakeholders, allowing them to respond swiftly to potential threats. These alerts are critical for preventing fraud rings from executing their schemes, as they enable businesses to take action before significant damage occurs.
To illustrate how our platform effectively detects and stops the activities of fraud rings, consider this hypothetical case.
Suppose the system spots suspicious activities with patterns similar to previous malicious behavior. This suggests that these activities are likely being orchestrated by the same actors.
Security insights page
By selecting the suspicious activity notification, the security insights page provides a detailed graph used to detect the malicious behavior, like the one below:
Graph representation of a fraud ring
This graph reveals an unusually large number of entities and transactions connected to the same user, indicating potential orchestrated action. Although this is an extreme example, a smaller network of entities, still oddly connected, can also suggest fraud ring activity:
Network of an odd number of entities and transactions connected in a suspicious manner
Both graphs displayed above can easily show numerous transactions linking various devices, users, IPs and other entities, which implies a fraud ring in action. Through this view, fraud analysts are able to effectively identify the compromised entities and block any devices, users or IP addresses relating to them, mitigating the fraud ring activity. Additionally, our platform automatically detects and flags fraudulent behavior with similar risk indicators as fraud campaigns, which allow for a broader view and a more effective action on fraud detection, mitigation and prevention.
One of our major clients in the financial industry leveraged these advanced capabilities to successfully combat a sophisticated fraud ring.
In early 2024, the bank’s security team noticed suspicious activity. Our platform’s powerful tools detected a broader network of fraud, revealing complex connections between devices, users, and IPs. This automated and detailed analysis allowed for the swift identification and blocking of compromised entities, preventing similar fraudulent behaviors from occurring.
This success story highlights the effectiveness of our technology and the expertise of our research team, which continuously improves our detection and response service. Our platform automates most of the heavy-lifting, enabling fraud teams to focus on strategic decision-making. The bank was able to act quickly and decisively, using both our advanced tools and our team’s expertise to strengthen their fraud prevention efforts.
Combating the sophisticated threat of fraud rings requires more than just traditional security measures. Transmit Security’s comprehensive platform offers a powerful, adaptive solution to these challenges by leveraging advanced AI-powered algorithms, machine learning and real-time analytics to detect and prevent fraud. Our holistic approach ensures that businesses can stay ahead of cybercriminals, protecting their digital assets, maintaining customer trust and preserving brand reputation.
Beyond fighting fraud rings, the Mosaic platform provides a modular architecture, advanced identity verification, true passwordless authentication with a variety of methods and a robust Identity Orchestration engine that isn’t available on any other service provider (since we invented it!). These features allow businesses to customize and scale their security measures, avoid high integration costs and effort and ensure a secure, user-friendly environment.
Our advanced document inspection, biometric matching and automated background checks ensure the authenticity of user identities, while our orchestration engine enables the fusion of identity, authentication management and fraud prevention, in addition to powering highly flexible, scalable and secure applications.
For more information on how Transmit Security’s solutions can enhance your organization’s security posture, request a demo today. With our personalized presentation, you’ll learn that by integrating these capabilities you can build a resilient defense against fraud and other cyber threats, ensuring long-term security and operational efficiency.
