Practical Fraud Prevention

Chapter 2. Fraudster Archetypes

Getting to know you, getting to know all about you…

Rodgers and Hammerstein¹

If you were trying to pin down the main difference between an analyst who works extensively with data, and a data scientist, you’d likely touch on the concept of domain expertise as a key value that analysts bring to the table. Data is enormously valuable, but it won’t give you the results you’re looking for if you don’t have a deep understanding of its context. This is particularly important with fraud fighting, since you’re fighting an enemy who actively fights back, who changes their techniques and patterns to evade detection and tries to reverse engineer and thus avoid the traps you’ve created to catch them. You don’t want to delay investigating a new attack type or new fraud ring until you have a lot of data about it. You want to catch the enemy before that.

Fraud domain experts are often the ones to provide the “secret sauce”—those impactful variables that really boost the performance of a fraud prediction model. If we had to narrow down that secret sauce, that domain expertise that every fraud analyst should hone to perfection, we’d say it ultimately comes down to fraudster profiling. A good analyst helps their team understand that not all fraudsters are created equal. Some of them are amateurs; others are pros. Some of them are native speakers of the language of their victims; others rely on auto translate. Some are very tech savvy, so trying to beat them with ...