Think about the most recent person who committed fraud against your company. Is this their first time?

How did you discover their fraudulent activity? Did you catch the person? Could you retrieve the stolen funds?

Now, think about that person going over to another brick-and-mortar or website and attempting to commit the same type of fraud. Except this time, the system flags him because your companies are both members of a data consortium. So, the second business prevented his attempted fraudulent activity.

Whether you are competitors or not, isn’t it great to think about stopping that criminal and preventing more fraud from occurring in our marketplace?

What is consortium data for fraud prevention?

As online transactions increase, fraudulent activity inherently increases as well. Organizations within industries affected by fraud often rely on consortium data as a system of defense against new fraud strategies.

Consortium data for fraud prevention is a system that shares transaction data between a group of similar merchants/businesses. These consortium data systems help more effectively fight against fraudulent activity since it gives all companies involved access to more data and knowledge about those attempting the fraud.

Why does it work so well? They say knowledge is power, and in the case of fraud prevention that is also true. The more transaction data available for the artificial-intelligence-powered systems to analyze, the more able it is to detect patterns and issues.

Companies working together to prevent fraud

The Association of Certified Fraud Examiners (ACFE) estimates that approximately 5% of an organization’s annual revenues are lost to fraud. If you translate that into dollars, in 2018 that would mean that $4.24 trillion was stolen in some way (when calculated against the gross world product of $84.84 trillion.)

So, how do consortium data systems work? Establishing third-party entities is a common technique for collaboration between competing merchants looking to share internal data, especially in business and insurance. Having proper systems and agreements in place will allow companies to openly and transparently share data, while also protecting their customers’ data.

Since all merchants and their fraud detection providers have the same goal of reducing fraud, joining forces makes sense and also saves everyone money and resources. Usually, within a consortium, when software identifies fraud patterns, it will alert everyone who belongs to the group about it. This helps to create a streamlined, efficient approach to fraud prevention.

Further reducing fraud with blockchain technology

Consortium data can help centralize the authentication of individual identities, especially with the aid of blockchain technology. Blockchain technology is a way of sharing transaction data in an encrypted format to ensure anonymity and security. Data within a blockchain cannot be altered, which ensures that those who can access it can’t tamper with it in any way.

When put to use by the fraud prevention industry, blockchain technology is a great addition to the equation due to its structure.

Do you want to be a part of a consortium data system?

At Fraud.net we provide enterprise fraud prevention, powered by a collective intelligence network with data on millions of network transactions and fraudulent personas.

Contact us to see how it works!