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The world changed when the COVID-19 pandemic began. Everything moved online to a much greater degree: school, work, and, surprisingly, fraud. Although some degree of online fraud has existed for decades, the Federal Trade Commission reported consumers lost almost $8.8 billion in fraud in 2022 (an over 400% increase since 2019) and the continuation of a disturbing trend. People continue to spend more time alone than ever before, and that time alone makes them not just more targeted, but also more vulnerable to fraud. Companies are falling victim to these trends just as much as individuals: according to PWC’s Global Economic Crime and Fraud Survey, more than half of companies with at least $10 billion in revenue experienced some sort of digital fraud.

This is a familiar story in the world of bot attacks. Cloudflare Bot Management helps customers identify the automated tools behind online fraud, but it’s important to note that not all fraud is committed by bots. If the target is valuable enough, bad actors will contract out the exploitation of online applications to real people. Security teams need to look at more than just bots to better secure online applications and tackle modern, online fraud.

Today, we're excited to announce Cloudflare Fraud Detection. Fraud Detection will give you precise, easy to use tools that can be deployed in seconds to any website on the Cloudflare network to help detect and categorize fraud. For every type of fraud we detect on your website, you will be able to choose the behavior that makes the most sense to you. While some customers will want to block fraudulent traffic at our edge, other customers may want to pass this information in headers to build integrations with their own app, or use our Cloudflare Workers platform to direct high risk users to load an alternate online experience with fewer capabilities.

The online fraud experience today

When we talk to organizations impacted by sophisticated, online fraud, the first thing we hear from frustrated security teams is that they know what they could do to stop fraud in a vacuum: they’ve proposed requiring email verification on signup, enforcing two-factor authentication for all logins, or blocking online purchases from anonymizing VPNs or countries they repeatedly see a disproportionately high number of charge-backs from. While all of these measures would undoubtedly reduce fraud, they would also make the user experience worse. The fear for every company is that a bad UX will mean slower adoption and less revenue, and that’s too steep a price to pay for most run-of-the-mill online fraud.

For those who’ve chosen to preserve that frictionless user experience and bear the cost of fraud, we see two big impacts: higher infrastructure costs and less efficient employees. Bad actors that abuse account creation endpoints or service availability endpoints often do so with floods of highly distributed HTTP requests, quickly moving through residential proxies to pass under IP based rate limiting rules. Without a way to identify fraudulent traffic with certainty, companies are forced to scale up their infrastructure to be able to serve new peaks in request traffic, even when they know the majority of this traffic is illegitimate. Engineering and Trust and Safety Teams suddenly have a whole new set of responsibilities: regularly banning IP addresses that will probably never be used again, routinely purging fraudulent data from over capacity databases, and even sometimes becoming de-facto fraud investigators. As a result, the organization incurs greater costs without any greater value to their customers.

Reduce modern fraud without hurting UX

Organizations have told us loud and clear that an effective fraud management solution needs to reliably stop bad actors before they can create fraudulent accounts, use stolen credit cards, or steal customer data all the while ensuring a frictionless user experience for real users. We are building novel and highly accurate detections, solving for the four common fraud types we hear the most demand for from businesses around the world:

• Fake Account Creation: Bad actors signing up for many different accounts to gain access to promotional rewards, or more resources than a single user should have access to.
• Account Takeover: Gaining unauthorized access to legitimate accounts, by means such as using stolen username and password combinations from other websites, guessing weak passwords, or abusing account recovery mechanisms.
• Card Testing and Fraudulent Transactions: Testing the validity of stolen credit card details or using those same details to purchase goods or services.
• Expediting: Obtaining limited availability goods or services by circumventing the normal user flow to complete orders more quickly than should be possible.

In order to trust your fraud management solution, organizations have to understand the decisions or predictions behind the detection of fraud. This is referred to as explainability. For example, it’s not enough to know a signup attempt was flagged as fraud. You need to know, for example, if a signup is fraudulent, exactly what field supplied by the user led us to think this was an issue, why it was an issue, and if it was part of a larger pattern. We will pass along this level of detail when we detect fraud so you can ensure we are only keeping the bad actors out.

Every business that deals with modern, online fraud has a different idea of what risks are acceptable, and a different preference for dealing with fraud once it’s been identified. To give customers maximum flexibility, we’re building Cloudflare’s fraud detection signals to be used individually, or combined with other Cloudflare security products in whichever way best fits each customer’s risk profile and use case, all while using the familiar Cloudflare Firewall Rules interface. Templated rules and suggestions will be available to provide guidance and help customers become familiar with the new features, but each customer will have the option of fully customizing how they want to protect each internet application. Customers can either block, rate-limit, or challenge requests at the edge, or send those signals upstream in request headers, to trigger custom in-application behavior.

Cloudflare provides application performance and security services to millions of sites, and we see 45 million HTTP requests per second on average. The massive diversity and volume of this traffic puts us in a unique position to analyze and defeat online fraud. Cloudflare Bot Management is already built to run our Machine Learning model that detects automated traffic on every request we see. To better tackle more challenging use cases like online fraud, we made our lightning fast Machine Learning even more performant. The typical Machine Learning model now executes in under 0.2 milliseconds, giving us the architecture we need to run multiple specific Machine Learning models in parallel without slowing down content delivery.

Stopping fake account creation and adding to Cloudflare’s defense in depth

The first problem our customers asked us to tackle is detecting fake account creation. Cloudflare is perfectly positioned to solve this because we see more account creation pages than anyone else. Using sampled fake account attack data from our customers, we started looking at signup submission data, and how threat intelligence curated by our Cloudforce One team might be helpful. We found that the data used in our Cloudflare One products was already able to identify 72% of fake accounts based on the signup details supplied by the bad actor, such as the email address or the domain they’re using in the attack. We are continuing to add more sources of threat intelligence data specific to fake accounts to get this number close to 100%. On top of these threat intelligence based rules, we are also training new machine learning models on this data as well, that will spot trends like popular fraud domains based on intelligence from the millions of domains we see across the Cloudflare network.

Making fraud inefficient by expediting detection

The second problem customers asked us to prioritize is expediting. As a reminder, expediting means visiting a succession of web pages faster than would be possible for a normal user, and sometimes skipping ahead in the order of web pages in order to efficiently exploit a resource.

For instance, let’s say that you have an Account Recovery page that is being spammed by a sophisticated group of bad actors, looking for vulnerable users they can steal reset tokens for. In this case, the fraudsters have access to a large number of valid email addresses and they’re testing which of these addresses may be used at your website. To prevent your account recovery process from being abused, we need to ensure that no single person can move through the account recovery process faster, or in a different order than a real person would.

In order to complete a valid password reset action on your site, you may know that a user should have made:

• A GET request to render your login page
• A POST request to the login page (at least one second after receiving the login page HTML)
• A GET request to render the Account Recovery page (at least one second after receiving the POST response)
• A POST request to the password reset page (at least one second after receiving the Account Recovery page HTML)
• Taken a total time of less than 5 seconds to complete the process

To solve this, we will rely on encrypted data stored by the user in a token to help us determine if the user has visited all the necessary pages needed in a reasonable amount of time to be performing sensitive actions on your site. If your account recovery process is being abused, the encrypted token we supply acts as a VIP pass, allowing only authorized users to successfully complete the password recovery process. Without a pass indicating the user has gone through the normal recovery flow in the correct order and time, they are denied entry to complete a password recovery. By forcing the bad actor to behave the same as a legitimate user, we make their task of checking which of their compromised email addresses might be registered at your site an impossibly slow process, forcing them to move on to other targets.

These are just two of the first techniques we use to identify and block fraud. We are also building Account Takeover and Carding Abuse detections that we will be talking about in the future on this blog. As online fraud continues to evolve, we will continue to build new and unique detections, leveraging Cloudflare’s unique position to help keep the internet safe.

Where do I sign up?

Cloudflare’s mission is to help build a better Internet, and that includes dealing with the evolution of modern online fraud. If you’re spending hours cleaning up after fraud, or are tired of paying to serve web traffic to bad actors, you can join in the Cloudflare Fraud Detection Early Access in the second half of 2023 by submitting your contact information here. Early Access customers can opt in to providing training data sets right away, making our models more effective for their use cases. You’ll also get test access to our newest models, and future fraud protection features as soon as they roll out.

We protect entire corporate networks, help customers build Internet-scale applications efficiently, accelerate any website or Internet application, ward off DDoS attacks, keep hackers at bay, and can help you on your journey to Zero Trust.

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