How to Effectively Outsource Fraud Prevention in 2026

How much does undetected fraud cost your business? The cross-industry average stands at up to 5% of revenue, according to the 2025 Digital Fraud Report. And fraudsters don’t seemintent on stopping, so much so that 43% of businesses state that the increase in fraud outpaces their revenue growth.

The situation is particularly dire in the iGaming industry. Between 2022 and 2024, fraud in the iGaming industry grew by an average of 64% year over year , driven by multi-accounting, bonus abuse, affiliate fraud, and automated bot activity. Fraudsters also increasingly combine these schemes with stolen identities and account takeovers, making detection even more complex.

Staying one step ahead of innovative fraud schemes is something a single business simply can’t do on its own. Luckily, this is where fraud prevention outsourcing comes in.

Why Opt for Fraud Prevention Outsourcing?

You might think that fraud prevention outsourcing means adopting a third-party SaaS solution. It’s true, to an extent. You will need this solution to analyze user activity and transactions in real time and flag any suspicious activity. However, it’s not the only thing you should get in return.

When you outsource fraud prevention services, the vendor’s support in developing a fraud prevention strategy, setting up the solution, and maintaining it long-term is just as important.

Outsourcing your fraud prevention efforts comes with several benefits for your business:

• Cutting-edge features. The vendor stays on top of the latest fraud schemes and enables you to counter them with feature updates that don’t cost you a dime more.
• Maintenance and support taken care of. Your vendor takes on all maintenance tasks and provides technical support to your team when necessary. You also gain access to the vendor’s expertise in fraud prevention.
• Little to no upfront costs. Developing a custom fraud prevention tool from scratch means potentially hundreds of thousands of dollars in development costs. Installing a SaaS tool comes without such exorbitant upfront costs (although you might need to invest in your data infrastructure).
• More effective resource allocation. With a fraud prevention tool, you can reduce your reliance on manual checks, freeing up your team to focus on the big picture. Automating processes makes fraud prevention both more accurate and more cost-efficient.

How a Fraud Prevention Solution Works

In the early days, digital fraud prevention relied on static if-then rules. While those are still in use today, modern solutions like Frogo combine three complementary capabilities:

• Static rules are straightforward if-then conditions. For example, if a user uses an anonymous proxy. Frogo responds to the client that the activity is suspicious, and the client then decides what happens next (e.g., step-up authentication, account lock, or monitoring). Static rules are easy to set up but generate many false positives and rarely catch sophisticated schemes.
• Dynamic rules compare current activity against a moving baseline of what is considered normal for that user or segment. They detect deviations over time: if a user gradually increases weekly spending from €500 to €600, no alert is triggered; but if the same user suddenly spends €2,000 in three hours, the dynamic rule will fire. These rules help notice unusual behavior or attacks by spotting sudden changes compared to recent patterns.
• AI predictions. AI-powered models analyze historical and live data to detect complex fraud patterns in real time. They recognize both known threats and new, emerging schemes that static or dynamic rules alone may miss.

Frogo tip: Don’t treat these as alternatives. The most resilient solutions combine static, dynamic, and AI-driven layers to cover both simple and sophisticated fraud scenarios.

7 Steps for Finding the Right Fraud Prevention Solution

Choosing the wrong fraud prevention tool can be extremely costly. The biggest risk is direct money loss — missed fraud attempts quickly translate into revenue leakage. On top of that, you may face too many false positives, compliance violations, inefficient processes, and inflated operational costs.

Here’s how to avoid all of that in seven practical steps.

1. Identify Threats

Fraud risks in e-commerce aren’t identical to those in iGaming or finance, and neither are the features you’ll need. So, before you can create a list of must-haves for your fraud prevention solution, pinpoint the common risks your business faces.

For example, common fraud risks in iGaming include:

• Money laundering
• Identity theft and multi-accounting
• Transaction fraud (synthetic card use, BIN attacks, payment method abuse)
• Bonus abuse (welcome bonus manipulation, promo code duplication)
• Internal fraud
• Betting and gaming fraud
• Affiliate fraud (e.g., RevShare cheating)

In finance and banking, in turn, you’ll be facing risks like:

• Money laundering
• Identity theft and multi-accounting
• Transaction fraud (synthetic card use, BIN attacks, payment method abuse)
• Transfer abuse (internal employee fraud, high-volume transfers)
• Bot activity in accounts
• Fraudulent cashouts

2. Review Compliance Requirements

Whether you’re running a neobank or an iGaming platform, you probably have legal requirements to comply with. So, by extension, your fraud prevention outsourcing partner should meet those requirements as well. They typically include:

• Anti-money laundering (AML) measures
• Payment security measures (PCI DSS, PSD2)

On top of that, consider the legal constraints imposed by privacy laws like the GDPR in the EU, CCPA in California, and PIPEDA in Canada. For example, when you collect and analyze user data for fraud prevention purposes (such an email, full name, or other identifiers), you may have to anonymize it, obtain informed consent, and enable data rectification and erasure on demand.

With AI-focused legislation passed in several jurisdictions (most notably, the EU), you may also need to ensure compliance if the solution uses predictive analytics.

3. Evaluate Your Current Data Strategy

Fraud prevention outsourcing won’t work for you if you can’t gather enough quality data for the tools, especially if they include AI-powered features. If your data is incomplete or inaccurate, it’s a classic case of ‘garbage in, garbage out.’ In other words, the fraud prevention tool will return inaccurate output, thus either missing fraud or returning false positives.

To assess your current data readiness, take stock of your:

• Data quality: its completeness, integrity, timeliness, consistency, and accuracy
• Data infrastructure: where the data is stored, how it’s aggregated, and whether your data pipelines show optimal performance for the current and future volumes and velocity
• Data governance: internal controls over who can access and manipulate data
• Data accessibility and interoperability between different systems

If you’re not sure your data architecture is ready for a fraud prevention tool, discuss your concerns with the vendor. Reliable vendors can help you prepare your infrastructure for the solution before implementation.

4. Determine the Required Fraud Prevention Features

Now, it’s time to prepare a list of features your fraud prevention solution must have. The most sought-after fraud detection and prevention features include:

• Scoring engine: custom static and dynamic rules for risk assessment based on the region, user segment, and type of activity
• Lists: blacklists and whitelists with automated updates
• Device fingerprinting: user device identification via software and hardware information collection
• Behavioral pattern analysis: AI-powered user activity analysis to detect anomalies in real time
• Database checks: verifications against global fraudster and compromised card databases
• Risk-based authentication: automated reauthentication requests to prevent account takeover and reselling
• AI-powered user segmentation: dynamic risk scoring in real time based on user activity to detect bonus abuse, referral farming, etc.
• Investigations module: forensic tools for analyzing fraud cases and identifying fraud rings and collusion

The exact list of fraud prevention features will depend on your business’s vertical and risk profile.

In addition to them, consider:

• Notifications: customizable real-time alerts via messengers or email about suspicious activity and new fraud trends
• Integrations: available out-of-the-box APIs or the possibility to develop custom integrations with your internal systems
• Data security: encryption, role-based access control, etc.
• Data analytics and visualization: dashboards for user segmentation and insights into fraud trends
• Unified control panel: rule and list management, access management, and reporting

5. Consider Tool Flexibility and Customizability

Without highly customizable rules and workflows, you’ll struggle to adapt the tool to your business needs now and in the future. Being unable to tailor it to your specific processes and fraud risks will undermine the accuracy of fraud prevention and increase operational costs.

Software flexibility is also a must if you want to easily adapt your tool to evolving and emerging fraud schemes by creating new rules or adjusting thresholds. Plus, using it for new use cases also requires inherent flexibility.

When assessing the flexibility and customizability of fraud prevention tools, pay attention to:

• Workflow customization and configuration
• Custom integration options
• Scoring customization based on in-house policies
• Check customization based on the user risk profile
• Automatic threshold adjustment

6. Minimize False Positives

Even when you outsource fraud prevention, customer service teams may still have to process claims related to false positives. They occur when a tool flags legitimate activity as an anomaly.

False positives lead to friction in the customer experience. They can even cost you customers if they get automatically locked out of their account and decide it’s not worth it to dispute the case. High false positives also increase the load on your customer service team and operational costs.

To avoid false positives, you’ll need to establish the right thresholds for rule-based policies. That said, your tool should come with built-in capabilities for reducing false positives. Those include dynamic threshold recalculation and behavioral analytics combined with device fingerprinting.

Case in point: Frogo’s dynamic rules for scoring are based on automatically recalculated norms and thresholds. This enables Frogo to detect fraud more accurately. Its behavioral analytics model, in turn, is continuously trained and updated on live attacks and 200+ million real events a month to ensure its accuracy and reliability.

7. Consider the Vendor’s Support

When you outsource fraud prevention, support is key. So, if you don’t have a full-fledged fraud prevention team on your payroll, opt for a vendor ready to help you build a fraud strategy from scratch. And even if you do, consider the vendor’s readiness to:

• Evaluate your current data readiness for the fraud prevention solution
• Help you improve your data readiness if necessary
• Build custom integrations to connect the solution with your data sources
• Integrate it with your internal systems
• Configure, set up, and deploy the fraud prevention tool to your infrastructure
• Onboard your teams if necessary
• Provide ongoing technical support and consulting

4 Best Practices for Fraud Prevention Outsourcing

To ensure you get a good ROI for your investment in fraud prevention outsourcing, keep these four best practices in mind:

• Pay attention to integrations. Fraud prevention software can’t deliver results without enough data. Before implementation, make sure you can consolidate data from all relevant sources (e.g., iGaming platforms, mobile banking apps, CRMs, payment gateways) and feed it to the vendor via API. The more complete the data flow, the more accurate the fraud detection and prevention outcomes will be.
• Prioritize robust automation and customization features. Automation will save your teams time, plain and simple. Diverse customization options, such as configurable alerts or rules for scoring, will enable you to adapt your solution to your business needs.
• Choose a solution tailored to your specific vertical. An iGaming business will need a different range of fraud prevention features than an online bank. So, make sure the vendor understands the fraud risks in your domain and offers technical capabilities to address each of them.
• Avoid “one-size-fits-all” promises. While you want a comprehensive fraud prevention toolkit, not every solution covers every compliance requirement. For example, banks may need sanction screening, while iGaming platforms focus on player verification, transaction monitoring, and anti-fraud automation. If your vendor doesn’t provide these directly, check how well their system integrates with specialized providers. The best strategy is to build a flexible fraud prevention stack where each part does its job well, rather than expecting one tool to cover everything.

Fraud Prevention Outsourcing: Your Checklist

To outsource your fraud prevention efforts effectively:

Final Thoughts

Fraud prevention outsourcing enables you to benefit from your vendor’s expertise in addressing fraud risks, both when you implement the solution and while you’re using it. Your solution, in turn, remains up to date to tackle the most recent fraud risks, without any extra expenses on your part.

However, finding the right fraud prevention vendor is easier said than done. You need to take into account your particular fraud risks, compliance needs, data readiness, and feature and flexibility requirements. You’ll also need to make sure your vendor will provide you with the support you need when you need it.

Frogo is not just a fraud prevention tool; we’re your fraud prevention partner. Our team can help you develop a fraud prevention strategy, establish internal risk management processes, and configure Frogo according to your needs. Our solution, in turn, will help you counter the full range of fraud risks with device fingerprinting, rule-based scoring, AI predictions, and graph-based forensic tools.

Talk to our experts to discuss how Frogo can help your business reduce fraud losses and optimize fraud prevention processes, all while minimizing false positives.