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Layered fraud prevention on the rise: Gartner

By 2014, 15% of enterprises will adopt layered fraud prevention techniques for their internal systems to compensate for weaknesses inherent in using only authentication methods, according to Gartner, Inc.

According to Gartner analysts no single layer of fraud prevention or authentication is enough to keep determined fraudsters out of enterprise systems. Multiple layers must be employed to defend against today’s attacks and those that have yet to appear.

“Malware-based attacks against bank customers and company employees are levying severe reputational and financial damage on their victims. They are fast becoming a prevalent tool for attacking customer and corporate accounts, and stealing sensitive information or funds,” said Avivah Litan, VP and distinguished analyst at Gartner. “Fighting these and future types of attacks requires a layered fraud prevention approach.”

Litan explained that while the layered approach to fraud prevention tries to keep the attackers from getting inside in the first place, it also assumes that they will make it in, and that multiple fraud prevention layers are needed to stop the damage once they do. She said “no authentication measure on its own, especially when communicating through a browser, is sufficient to counter today’s threats.”

Gartner broke down fraud prevention into five layers, beginning with layer 1 which is endpoint-centric, and involves technologies deployed in the context of users and the endpoints that they use.

These technologies include secure browsing applications or hardware, as well as transaction-signing devices. Transaction-signing devices can be dedicated tokens, telephones, PCs and more.

Out-of-band or dedicated hardware-based transaction verification offer stronger security and a higher level of assurance than in-band processes do. The technologies in this layer can be typically deployed faster than those in subsequent layers and go a long way toward defeating malware-based attacks.

Layer 2, according to Gartner,  is navigation-centric; this monitors and analyses session navigation behaviour and compares it with navigation patterns that are expected on that site, or uses rules that identify abnormal and suspect navigation patterns.

According to the analyst firm, this is useful for spotting individual suspect transactions as well as fraud rings. This layer can also generally be deployed faster than technologies in the following layers and it can be effective in identifying and defeating malware-based attacks.

Layer 3 is then, user- and account-centric for a specific channel, such as online sales; it monitors and analyses user or account behaviour and associated transactions and identifies anomalous behaviour, using rules or statistical models. It may also use continuously updated profiles of users and accounts, as well as peer groups for comparing transactions and identifying the suspect ones.

This is followed by Layer 4, which is user- and account-centric across multiple channels and products. As with the preceding layer, it looks for suspect user or account behaviour, but it also offers the benefit of looking across channels and products and correlating alerts and activities for each user, account or entity.

Finally, Gartner defines Layer 5 as an entity link analysis. It enables the analysis of relationships among internal and/or external entities and their attributes (for example, users, accounts, account attributes, machines and machine attributes) to detect organised or collusive criminal activities or misuse.

“Depending on the size and complexity of the end-user institution, implementing the systems that support a layered fraud management framework can take at least three to five years, especially when it comes to the upper layers — Layers 3, 4 and 5. These efforts are continuous, because fraud prevention rules and models require ongoing maintenance, tuning and care,” said Litan

“Unfortunately, organisations don’t have years to wait to introduce fraud prevention while malware-based attacks proliferate. We recommend starting with the first layer of this fraud prevention framework, as well as the second layer, resources permitting, since these can be deployed relatively quickly,” she added. “Enterprises that start by deploying lower levels of the layered stack can help to stave off immediate threats, with the assurance that these layers are part of an overall strategy that relies on basic fraud prevention principles, such as user and account profiling that have generally stood the test of time.”

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