The developer guide for fraud prevention tools is a critical element of any business that conducts online transactions. According to some estimates, global ecommerce fraud losses reached $41 billion in 2022. Fraudulent transaction losses aren’t just costly to merchants; they can have a significant impact on customer loyalty and trust.

Effective fraud prevention tools strike a delicate balance between stopping fraudulent activity and not interfering with the customer experience. The best tools are streamlined and help businesses implement robust counter-fraud measures without frustrating users.

Fraud Prevention Development Tips with IPQS

Detection tools identify “good” from “bad,” leveraging data to identify and flag suspicious activity. These can range from a simple rule set to an advanced machine learning model using thousands of data points to assess each event. A good detection solution should be able to reduce the number of false positives, and also decrease manual review time so that real fraud can be quickly stopped without affecting genuine customers.

Another metric to look for is the prevent rate, which measures how many transactions are blocked due to suspected fraud. A high prevent rate indicates that fraud is being prevented well, but a low one may indicate that your risk threshold is too low or that the tool has poor recall.

Another important metric to measure is the chargeback rate, which reflects the total amount of money lost due to fraud. This includes direct costs like merchandise, shipping, and chargeback fees as well as indirect losses like reputational damage. There are a few ways to minimize chargebacks: Ensure that your app is secure and uses DMARC or SPF, which add a digital signature to emails so they are clearly authenticated.