Bears, mice, and moles aren't enough: a better approach for preventing fraud

Summary

Fraud prevention is a never-ending battle, and seasoned fraud teams almost always describe it in terms of what I call the three animal analogies:Whack-a-mole: ban one account, and another pops up. It can be difficult to stop a bad actor, because of the dynamic of…Cat-and-mouse: in general, fraud is adversarial; you can’t just solve it because the attackers are evolving, too.You don’t need to run faster than the bear: luckily, fraudsters are looking for the path of least resistance. You can add controls that aren’t perfect, but lower the attacker’s ROI enough that they move on to easier targets.I love these analogies. They’re colorful and accurately capture some of the flavors of our work.At the same time, they’re not very useful. In the last year, we’ve observed increasing fraud activity, from low-effort automated spam (made easier by LLMs, unfortunately) to sophisticated account takeover attacks from residential botnets. What am I supposed to do, whack faster? Ask the bear to go chase someone else instead?To actually improve fraud prevention, we need to be able to evaluate our current state and potential future options in a meaningful way. At Stytch, we have developed a high-level framework for fraud prevention, and we use it to guide our internal fraud strategy as well as our Device Fingerprinting product.The Stytch fraud prevention frameworkAt Stytch, we evaluate four main areas for our fraud prevention framework:Signal gathering: Capture information about user activity.Decisioning: Given that information, decide what to do.Enforcement: Given the decision, add or reduce friction in the user's journey.Analysis and feedback loop: Observe, iterate, and improve detection and controls based on real-world outcomes.It may seem obvious to break down the fraud prevention process in this way - it’s very similar to John Boyd’s OODA loop concept - but it gives us a common language and separation of concerns.If there’s a fraud problem, it’s because we are falling short in at ...