We value the importance of building and maintaining positive customer relationships. But, how do you also manage the ever increasing levels of fraud and mitigate risk? 

As businesses launch new products and services that impact the way we do business – for example, payment and shopping innovations that make commerce easier and/or more accessible to consumers, fraudsters have also launched new methods designed to “beat the system."

The fraud landscape is evolving and fraudsters are constantly finding new ways to access products and services using stolen identities.  So, the question then becomes, “How do you ensure the customer onboarding process is seamless enough that the maximum amount of good customers gain access, while still blocking the fraudsters?”

The more obstacles that businesses implement to protect both their customers and business from fraud, the more difficult it can be for consumers, the majority of which are legitimate, to access those services. These hurdles cause, in many cases, unnecessary customer friction, which can be defined as any process that increases the amount of effort a customer must go through to reach an end goal.

There is a fine line that businesses must walk every day to ensure good customers can easily access their service, while also keeping the fraudsters out. The goal of many organizations is to be able to reduce customer friction for the good customers and also deter the fraud. So what is the right amount of friction and how should you control it in the identity verification process?

Businesses should be able to control the customer’s onboarding experience, including identity verification and fraud prevention, on-demand as well as dynamically set rules that evaluate risk and escalate to higher levels of verification only when needed. By employing a multi-layered authentication approach to customer onboarding, organizations are able to seamlessly approve the good customers while enabling increased validation based on risk profile.

However, they key to an effective multi-layered authentication program is transparency. There should be no “black boxes” or scores where you are not sure what the data really means. Through transparency, you are able to evaluate risk and then dynamically make a decision based on your business criteria and what is happening real time with the customer transaction relating to identity, location, activity and device-based attributes. This should all be able to be updated on-demand, as we all know how often fraudsters are shifting their tactics in order to defraud your organization.

Multi-layered authentication programs drive customer acquisition and revenue while also deterring fraud.  Businesses are able to increase friction in the identity verification process only when it is needed as well as gain multiple opportunities to approve customers, which increases approval rates and allows the legitimate customer easy access to your products are services. Good customers are passed and move forward without any friction – while those that require increased verification are escalated and approved… or not.  When fighting fraud, we need to remember that most customers are legitimate.

John Dancu is President and CEO of IDology.