How PayPal Could Have Dodged 4.5m Bad Actors

How PayPal Could Have Dodged 4.5m Bad Actors

Bureau Team
Bureau Team

February 2, 2022

Bureau Team

February 4, 2022

In news that sent shockwaves across the financial world and their shares plunging, PayPal admitted to having identified 4.5 million accounts where ‘bad actors’ took advantage of their incentives and rewards programs. The company is now overhauling its marketing strategy aimed at amassing 750 million active accounts by 2025.

In 2021, PayPal came up with an incentive for signups to get new customers to open an account. But the payments giant later discovered that many of the accounts were created by bot farms, a system used by fraudsters to mirror genuine customers. What earlier seemed like a growth initiative eventually turned into a nightmare for the company.

Growth vs Fraud Prevention

Negotiating the thin line between growth and fraud prevention is tricky for businesses. Adding too many checks and balances will hit the top line and you may end up losing many genuine new customers to super-sensitive fraud filters. PayPal chose to go after their revenue goal and accept more customers to enhance their top line revenue but in turn got their bottom line hit from all the unfiltered fraud attempts.

As the company looks to change its customer acquisition strategy to move away from incentive programs and focus on ‘sustainable growth and driving engagement’, it also needs to re-look at its risk management system. No business should have to make a choice between fraud protection and revenue goals as both need to align to drive business growth.


Prevent Fraud with Bureau’s solutions

Every business needs to invest heavily in fraud prevention tools, which combine different aspects of the customer screening process. Such tools use intelligent automation to transform the client experience, accelerate onboarding, check for bots and avoid human error and compliance risks.

Bureau’s risk intelligence solution, addresses these pain points and helps onboard customers without any friction. Users have the option to create custom rules or use preset defined workflows attuned to their use case.

It identifies bad actors by combining:

1) Device intelligence: creates a unique device fingerprint and detects suspicious elements such as emulators, spoofing, and rooted phones

2) Persona intelligence: harnesses data associated with a user, user inputs, MNOs, and third parties

3) Behaviour biometrics: helps in identifying genuine users from imposters and bots

4) IP addresses: checks whether IP address is spoofed or not

Intelligently merging and monitoring these attributes at each step of the user journey provides indicators of suspicious activity, in this case, the presence of a bot farm.

Bureau's solution also checks for other suspicious markers such as the prevalence of multiple account opening attempts arising from the same set of devices, potentially indicating a fraud ring. Such high-risk profiles are then flagged for further checks while those with low risk or trustworthy profiles are rewarded with a smooth onboarding process. 


Why Use Bureau's solution?

Converts more good users

Good, creditworthy users should not be plagued by stringent account opening and operating processes. Prism runs in the background and accelerates conversions of good users.

Uplifts customer experience

Customer experience is a crucial differentiator for banks and financial institutions. We help you chart out frictionless itineraries that improve customer experience and stickiness, resulting in more customer loyalty.

Grows your revenue

Maximise your revenue by approving more transactions, reducing false declines, and blocking suspicious transactions.

Summing Up

As fraud continues to evolve, it is necessary for businesses to adopt solutions such as Prism that are aimed at making the customer onboarding process more efficient and fraud-free. It’s a win-win for both parties. While customers enjoy swift onboarding, you have verified customer identities and chances of less fraudulent activities in future.

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