Uncovering The Dynamics of Fraud Detection (Types, Techniques and Tool You Need)

Understand fraud detection and prevention, its techniques to ensure the safety of your business. Explore how Nected can help your business in fraud detection.

Uncovering The Dynamics of Fraud Detection (Types, Techniques and Tool You Need)

Prabhat Gupta

 min read
Uncovering The Dynamics of Fraud Detection (Types, Techniques and Tool You Need)Uncovering The Dynamics of Fraud Detection (Types, Techniques and Tool You Need)
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 min read
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Does reading reports like ‘U.S. businesses lose 5% of their revenues to fraud each year according to the Association of Certified Fraud Examiners (ACFE)’ or ‘Approximately 33% of all businesses are affected by a fraud-related incident each year.’ makes you bite your nails worrying about your business?

Well, Staying ahead of time always keeps you in a safe place.

Imagine your business using the latest tools to combat fraud that is affecting a lot of sectors. In the current landscape where businesses are growing exponentially to their best, they face the issue of fraudulent activities happening all over the internet. As technology enhances, the surge in search for good fraud detection software can also be noticed. 

Detecting fraud to keep your business safe requires a better choice of tools and the orchestration of their features that answer the industry's needs. Various aspects are needed to be understood when looking at fraud and the ways of detecting and preventing it. 

This blog caters for the portion that provides the satisfaction of complete knowledge about fraud detection, fraud detection systems, and how you can prevent your business from being a victim of fraud.

Understanding Fraud Detection

Fraud detection is the systematic process of identifying, analysing, and preventing deceptive practices or activities that are aimed at causing financial harm, reputational damage, or other adverse effects to your business. Detecting an anomaly in your system that indicates some fraud involves the utilisation of advanced technology and data analysis that uncover potential risks.

Businesses and customers should be aware of the signs that are indicative of fraud. There are several ways to prevent fraud, such as noticing the change in customer behaviour and looking for unusual patterns in the data. The integration of technologies has resulted in a major reduction in fraud cases. It is essential to have a fraud detection system that can analyse potential threats. 

Most Common Types of Frauds

The most common types of fraud that could be detected are:

1. Phishing:

  • A phishing attack is very often used to steal user data—can include credit card details, login information, and personal information. 
  • The links are shared by a fraudster which makes a user access the links.

2. Identity theft:

  • When someone steals your personal information, such as Social Security Number(SSN), credit card information, and your bank account number, Identity theft happens. 
  • Various ways are practised by scammers to steal information, they could even search the trash of a bank just to check your previous statements to gather the details. 

3. Payroll Fraud:

  • Payroll fraud happens when a person, in an illegal way, changes the company's payroll system to gain their benefit by manipulating employee compensation. 
  • It’s a kind of fraud that an employee or employer can commit. 

4. Credit card fraud:

  • The unauthorised use of a debit or a credit card to make scams, or to copy their details refers to Credit card Fraud.
  • Victim’s personal Identifying Information (PII) is used by a criminal to take control of their account and play with their funds. The details must have been stolen or found on the dark web. 

5. Investment fraud:

  • Investment fraud is a white-collar crime, and it happens when someone purposely misleads or tricks an investor to gain financial gain.
  • It is illegal for any party to hide material information about investments–such as the risks involved–to induce investors into investing.

6. Invoice fraud:

  • Fraudsters engaged in fraud generally know the relationship between vendors and organisations.
  • The fraudsters know most of the details, such as when a vendor sends an invoice or when they're usually paid.
  • All of this makes the victim believe that the fraudsters are genuine. 
  • The companies mostly realise they have been frauded when the original vendor comes to them with the original invoices/bills carrying due payments.

How Can Fraud Be Prevented?

Fraud prevention is the implementation of a strategy to detect fraudulent activities and prevent them from causing financial, and reputational damage to the customer and the business. As businesses grow and go digital, a strong fraud prevention strategy will only become more important. 

This table would help you create a better understanding by having a glance at it:

Prevention Measures


Education and Training 

Provide awareness and training on fraud prevention.

Strong Authentication

Implement multi-factor authentication for access.

Regular Software Updates

Keep software and systems updated to patch vulnerabilities.

Access Controls

Restrict access to sensitive systems based on roles.

Access Control Rules

Set up rules for user permissions and access restrictions.

Transaction Monitoring

Use real-time monitoring to identify unusual activities.

Transaction Monitoring Rules

Define rules for monitoring transactions in real-time.

Fraud Prevention Rules

Establish rules within fraud prevention systems for early detection.

Fraud Detection Systems

Employ fraud detection and prevention software that meets your industry needs.

Implementing the above measures would help you to protect your business against the fraudulent activities happening around you. Choosing a good rule-based solution lets you keep an eye on your customer’s valuable data.

Secure your business: learn more about how fraud can be prevented and detected.

Fraud Detection Techniques

Effective fraud detection techniques are employed to fight threats to a business. Fraud detection systems figure out the data and if any unusual changes are made to it. These kinds of softwares help you learn about how frauds happen at your company so that they are paused. 

The techniques commonly used by fraud detection softwares are -

1. Rule-based system: 

  • A rule-based system uses an approach that involves criteria and conditions that identify a potential risk that could be hovering over the business by providing a structured and effective system. 
  • Can help companies implement real-time fraud detection.

Let's understand with an example: "If a user makes more than three large transactions within an hour, flag for review." If a user, who makes small transactions, suddenly attempts multiple large transactions in a short period, the rule triggers an alert for further investigation, helping prevent potential fraud.

Explore more on how Nected provides the best rule-based fraud detection and prevention solution.

2. Statistical data analysis with Machine Learning: 

  • Data analysis and machine learning help prevent fraud by collecting, identifying, and interpreting the data.
  • It can help in keeping an eye on the operations that are happening. 

3. Network Analysis through AI/ ML:

  • Network analysis is used to identify any irregularity in the network or transactions. That may include cybercrime or money laundering. It is also a technique that is used to identify patterns and relationships between entities.

Which Industries Need Fraud Detection The Most?

Major industries use fraud detection and prevention services to be on the safer side. These are used to detect various frauds we discussed above. Fraud detection systems are commonly used in the following industries:


Application of fraud detection prevention


Ensures secure online transactions, prevents account breaches, and uses real-time models for risk assessment and anomaly detection in financial activities. 


Prevents unauthorised usage. Using SaaS fraud detection helps detect suspicious user activities and implements anomaly detection for irregular usage patterns and unauthorised access attempts. 


Detects fraud enrollments, and irregular login patterns, and helps provide a secure learning platform.


An e-commerce fraud detection platform prevents online payment fraud, account takeovers, and fake reviews. Uses real-time models for risk assessment and anomaly detection in financial activities. 


A healthcare fraud detection platform detects false insurance claims and irregular billing patterns.


Prevents fraudulent transactions, including online payment fraud and chargebacks. Uses pattern recognition to identify abnormal purchasing behaviour. Implements real-time monitoring for point-of-sale transactions.


Helps detect unauthorised transactions, identity theft, and credit card fraud. Implements anomaly detection for irregular account activities and transaction patterns. 

Cyber security

Helps identify unauthorised access and data breaches. Implements anomaly detection for unusual user behaviour and identifies potential security threats.

Many industries leverage fraud detection services which is a proper orchestration of services used to protect their business and address their industry-specific needs.

Here’s How You Choose The Best Fraud Detection Platform

Your business needs a smart, latest and perfect fraud detection tool that handles your operations, scales along with them, and provides seamless integration. There are many companies providing fraud detection services catering for the needs of industries. Let’s delve deeper into understanding the best fraud detection platform. 

Evaluating Essential Functionalities: 

A robust fraud detection platform must provide powerful features that have Advanced analytics, customization, and a user-friendly interface that can be used by Non-Tech teams would be the best. It would also help in quick decision-making and implementing the changes.


A scalable platform would have the capacity to handle growth and the increasing amount of incoming data and the business’s growing needs. 

Integration capabilities:

A good fraud detection platform should possess compatibility with existing infrastructure: integrate seamlessly with existing systems and your databases, such as for transaction processing, customer relationship management (CRM), etc.

Amongst the diverse and expanded environment of fraud detection, comes Nected. Address all your business requirements with the latest in-time rule-based fraud detection services provided by Nected

Transform Your Business Into Fraud-proof Using Nected

Imagine a software that provides you with all the features of the best fraud detection platform you need for your business. Well, Nected is your one-stop solution for all your fraud detection and prevention needs.

Nected empowers the non-tech team with its seamless user-friendly UI and robust features. Understanding the dynamic and diverse environment for your business, you are provided with a solution that not only addresses the needs but also provides support to its users. 

Have a look at the perfectly curated characteristics delivered to you, by Nected:

  • Rule-based fraud detection: As you seen above, Nected uses an approach that involves criteria and conditions that identify a potential risk that could be hovering over the business by providing a structured and effective system. 
  • Flexibility: Nected understands the tactics to keep your business secure, and provides flexible solutions. It makes sure to keep your business ahead of what a fraudster might be planning to do.
  • Scalability: to accommodate the growing needs of your business, you are provided with a scalable fraud detection solution that understands growth and it scales to meet the demands of a dynamic business environment.
  • Ease of integration: Nected provides seamless integration with your existing systems and databases. With a user-friendly interface, you can easily use the features.

Connect your business’s data hassle-free with Nected’s ease of integration providing you with  100+ integrations over the platform.

  • Real-time monitoring: to conduct effective fraud detection, real-time monitoring is a critical aspect that helps fraud detection software to detect any fraud happening. The platform provides real-time updates of activities in your database and if something fishy is detected, you are already updated about it.

Boost your flexibility and accelerate your innovation as well as growth. Dive into cutting-edge features provided by Nected and cater to all your business to streamline operations with almost no risk of fraudulent activities.

Get started with using Nected as your fraud detection tool in just 15 minutes.

The Reflection: end

As our exploration comes to an end, we can already recall what came to our notice while reading the article. This is the time when technology is reaching its highest by advancing forever. Amid the advancement, there are a lot of cyber crimes happening affecting people and businesses up to the crime's maximum potential. 

To address this severe problem, there is a need for the best-in-class fraud detection and prevention software that is the front face of the security of your business. Never compromise with the deliverables, Nected is your guard to protect the losses that break one's motivation or even the glasses when angry.

Protect everything you worked and paid for, by making smart choices. Choose Nected as your fraud detection and prevention software and keep an eagle eye on what is up with your database with real-time updates based on your choices of pre-defined criteria.

Nected simplifies the complex fraud detection process with a user-friendly interface for authoring rules, decision tables and rules. Its real-time monitoring allows businesses to stay one step ahead of potential threats. It provides the best rule-based fraud detection software that understands your needs, is transparent to your use and is cost-effective.

Start using the future of Development, today