Fraud Strategy for Dormant Activity

January 10, 2023

In our fourth session of fraud office hours, an attendee asked, "What Approach Should You Take When a Dormant Account Becomes Active?" Watch this video to see how Unit21's Head of Fraud Risk, Alex Faivusovich, responded.

What Approach Should You Take When a Dormant Account Becomes Active?

"Whenever I start thinking about cross strategy for dormant activity, I, first of all, try to ask myself, how do you define dormant?

Define What Dormant Means

Historically speaking, financial institutions will say that any user who didn't take any actions, didn't look in the account, or didn't make any money movements, at least for two cycles, is considered dormant.

But today, with the way we have new offerings around fintech and crypto, (and different platforms with different users of those platforms), dormant can be very different from one platform to another. We have certain offerings that are only relevant for the holiday season.

So, for example, you would expect users to become active during the holidays suddenly. And then they will be dormant for another year until the next holiday season.

Or maybe you will have some platforms that offer services around a specific type of view. So maybe your customer will only use your platform when they need to travel somewhere. So when they're not traveling, they will be dormant.

A good question to ask yourself when you try to create a fraud strategy for dormant activities is, 'what is dormant to me, and how I define that?' Once you define that, I think the next step is understanding what signals are important to receive alerts for.

Understand Which Activities to Alert On

If you have a user who's been dormant for x-amount of time, what type of signals do you really want to start alerting on? Is it a login? Is it a transaction? Is it anything else? What is a red flag to me? What is interesting for me to see after a long period of the user being un-active?

And once you define that, this is where you can start writing out the strategy. But also, it's crucial to look at the non-active user almost as a new user.

If we haven't seen any activity in the past two or three months, we can almost treat them like a new customer. So, what do we expect a new customer to do? What type of transaction? What type of activity do we expect? Once you're able to answer all of those questions, you're ready to start writing your strategy."

Looking for more insights? Check out our fourth session of Fraud Office Hours on-demand for a deeper dive into how to use Unit21 as part of your fraud strategy for dormant activities.

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