Fraud detection application programming interfaces (APIs) provide businesses with powerful tools to identify and prevent fraudulent activities in real time. Companies can more effectively assess risks in transactions and user activities by integrating advanced algorithms, machine learning, and data analysis into existing systems.
Widely used in the financial and ecommerce sectors, APIs integrate seamlessly with existing tech stacks, providing an easy way for companies to protect themselves from fraud, including chargeback fraud, bot attacks, fake accounts, credit card fraud and more.
How Do Modern Fraud Detection Systems Work?
Fraud detection APIs analyze user data and behaviors to assess the risk of user activity. They typically work in the following order:
- Data Collection
Critical data is collected through an API at several vital points: onboarding, login, transactions, and when other activities, such as deposits or withdrawals, occur. - Data Processing
The collected data is sent to the fraud detection system, which enriches and analyzes it using preset rules or machine learning algorithms. - Risk Scoring
The system generates a risk score for each user or transaction based on the analysis. If built with whitebox machine learning, the system will provide transparent and human-readable explanations of how it arrived at these scores. - Action Triggering
Depending on the risk score, the API can trigger actions like approving, declining or flagging a manual review. With users classified based on their risk profile, they can be redirected toward additional security measures as needed.
Examples of Risky User Behaviors
- A user registers with a disposable email address domain. This can be flagged using reverse email lookup, as legitimate users typically use established email providers. Taking it a step further, examining related social media accounts linked to an email address can reveal insights into an individual’s authenticity.
- When a user signs in from a new device in an unfamiliar country, your IP analysis tool and device fingerprinting module detect the anomaly. This signals a potential account takeover (ATO), where someone may have obtained the login credentials.
- When customers purchase with a credit card that doesn’t match their name, it suggests the possible use of a stolen card, which could lead to costly chargebacks.
Fraud Detection APIs vs Manual Data
Integrating fraud detection APIs provides significant advantages over manual methods:
Efficiencies for Developers
Developers can avoid building a fraud detection system from scratch by integrating existing APIs and streamlining the process through automated queries found in documentation.
Ideal for Scaling
APIs enable large-scale real-time data processing, significantly reducing or eliminating manual efforts. For instance, SEON delivers fraud prevention results in under one second, even for thousands of simultaneous transactions or logins.
Fully Automated Processes
Once integrated, APIs automate data transfer, reducing the need for ongoing maintenance from both fraud and IT teams. Security updates and fixes are handled automatically, allowing teams to focus on business growth.
Personalization
APIs allow customization, letting businesses choose which data points and tools matter most and offering tailored solutions that align with specific fraud challenges.
Flexibility in Pricing
SEON’s API-based pricing model allows businesses to scale operations quickly, paying only for the number of API calls made. This flexibility accommodates fluctuations in demand, from temporary downturns to rapid expansion.
What Are the Benefits of a Fraud Detection API?
Fraud detection APIs offer a range of benefits that make them an essential tool for businesses looking to streamline their fraud prevention efforts. From scalability and automation to customization and flexible pricing, APIs provide a more efficient and cost-effective solution than manual data processing.
Good for Scaling
Manually reviewing vast amounts of user data is unfeasible, no matter how skilled your team is. APIs handle large-scale data, offering fast responses for thousands of logins, transactions, or signups. With SEON’s fraud detection platform, results are delivered in under one second, ensuring speed and efficiency for businesses and their users.
Automation
APIs connect seamlessly to web apps, eliminating the need for constant tweaks or waiting for IT updates. All updates and fixes are handled server-side, reducing IT resource costs and allowing you to focus on your core business.
Ease of Use
SEON’s API integrates seamlessly with your existing tech stack, allowing developers to get up and running quickly. There is no need for massive development changes; just consult the documentation to access the necessary functions, saving time and reducing IT workload for more cost-effective fraud prevention.
Flexibility and Customization Options
APIs offer customizable solutions based on your business’s unique needs. Whether an online casino or a loan provider, APIs allow you to focus on the data fields that matter most and create a modular fraud detection layer tailored to your goals.
Pay Per API Request
SEON’s pay-per-API-request model provides a scalable pricing option. This allows businesses to adjust costs based on their specific needs, whether experiencing rapid growth or temporary downturns, without the hassle of changing contracts.
3 Use Cases for Fraud Detection APIs
Real-Time Transaction Screening
Fraud detection APIs screen transactions instantly, assigning risk scores based on location, device and amount. It can flag suspicious activity for review and block high-risk transactions automatically, stopping fraud before it can occur.
User Authentication and Verification
APIs verify user identities by validating emails, phone numbers and other data. It can detect fake accounts, monitor login attempts through device fingerprinting and leverage device intelligence to prevent account takeovers and fraudulent signups.
Behavioral Analysis
PIs analyze user behavior using machine learning to detect anomalies, such as unusual spending patterns, login times or transaction velocities. By recognizing deviations from established user baselines, APIs help identify potential fraud, including money laundering.
Why Use REST APIs for Fraud Detection Systems?
APIs are usually categorized as SOAP or REST, both of which have advantages. At SEON, we use REST APIs, which are more lightweight and use the JSON format to receive or send information.
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How SEON’s Fraud Detection API Works
SEON’s customizable fraud detection API integrates seamlessly with existing systems, leveraging multiple data sources and advanced analytics to match your business’s risk tolerance. Here’s how it operates at a high level:
1. Data Collection and Enrichment
SEON’s API gathers data from key sources like email addresses, phone numbers, IP addresses and device intelligence. It enriches this data by cross-referencing with 100+ social media sites, analyzing historical validity, examining IP geolocation, and performing device fingerprinting.
2. Analysis and Risk Scoring
The enriched data undergoes in-depth analysis, including:
- Digital Footprint Analysis: Assesses user profiles based on their online presence.
- Behavioral Analysis: Identifies unusual activity patterns.
- Machine Learning: Applies both whitebox and blackbox models to detect fraud patterns. The system then assigns risk scores to user actions, enabling proactive fraud detection and response.
3. Real-Time Monitoring and Decision-Making
Operating in real-time, SEON’s API instantly monitors transactions, automates decisions based on risk thresholds, and accelerates manual reviews when needed.
4. Easy Integration and Customization
SEON’s API is designed for seamless integration and offers customization to align with specific fraud prevention needs, providing flexibility in managing risk.5. Comprehensive Fraud Prevention
Combining data enrichment, machine learning and behavioral analysis, SEON’s API tackles various fraud types – reducing transaction fraud, enhancing compliance, decreasing chargebacks and streamlining KYC – all within a single API call.
Fraud Detection API FAQ
This varies depending on how the company operates ie some offer a set fee for overall usage whereas others, including SEON, offer more flexible pricing based on the number of API requests.
Integration can be done within 24 hours but this differs depending on the product you choose and results are often be more precise once the solution has been in operation.
As soon as realistically possible. The longer you leave your business unprotected, the risks of fraudulent attacks/activities will continue to rise. No business is safe from online fraud, no matter its size, type or sector.
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Learn more about:
Device Fingerprinting | Device Intelligence | Browser Fingerprinting | Digital Footprinting | Fraud Risk Scoring
- Techcrunch: APIs are the next big SaaS wave
- University of Cambridge: Explainable Machine Learning for Fraud Detection
- OCADO Group: Using Google Cloud and machine learning to improve fraud detection
