The rise in fraudulent submissions has become a major challenge for claims administrators, often overwhelming systems designed to ensure fair compensation for legitimate claimants. As more fraudulent actors flood the system with fake claims, it is crucial for law firms and administrators to rethink their fraud prevention strategies.
One of the common methods employed to reduce fraudulent claims is frontend claim blocking, which includes tools like CAPTCHA or Web Application Firewall (WAF) software. These tools aim to deter bots by requiring users to perform tasks that only humans can complete, such as identifying images or solving puzzles; they also analyze the visitor’s IP address and interactions with the website in an attempt to detect bots. While initially effective, they are not sufficient as a standalone solution. Relying solely on frontend measures like CAPTCHA or WAFs creates a dangerous feedback loop, enabling fraudsters to adapt and refine their tactics.
The Pitfalls of Frontend-Only Fraud Prevention
When fraudsters encounter frontend tools, they are able to analyze the instant feedback provided by these systems, learning how to bypass them quickly. Oftentimes this includes click farms, CAPTCHA keys obtained nefariously, or using IP addresses that do not trigger WAF rejection. This challenges them to craft new, more sophisticated methods of fraud.
The case of one claims administrator deploying a Cloudflare WAF is an example. Initially, the frontend system reduced fraudulent submissions from 20,000 to manageable levels. However, within 48 hours, fraudsters had adapted, tripling the rate of fraudulent submissions to 60,000 per day. By the end of the claims period, the system was overwhelmed with more than 500,000 fraudulent submissions daily. This illustrates how fraudsters continuously escalate their efforts once they find a loophole in a system that relies solely on blocking methods.
The issue goes beyond technical vulnerabilities. When WAFs are over-tuned to block based on regions (like IP address filtering) or connection type (like VPN-blocking) can inadvertently prevent legitimate claimants from submitting their claims. Google reported that as of July 2024, nearly half (46%) of Americans use a VPN, often to protect their privacy. If legitimate claimants are unjustly blocked, settlements can be jeopardized because courts may reject the fairness of the process.
Why Backend Fraud Detection Is Needed
The limitations of frontend tools make it clear that claims administrators need a more comprehensive approach to combating fraud—one that integrates backend fraud detection and real-time claim analysis. Backend systems operate behind the scenes, without providing fraudsters with feedback to learn from. These systems can continuously monitor for patterns and anomalies in the data, flagging suspicious activity without alerting the fraudsters. Advanced algorithms can detect AI-generated names, fake addresses, and other markers of fraud that frontend tools might miss.
By employing backend tools, claims administrators can create a dynamic defense that evolves with the fraud landscape. This strategy ensures that even if one fraudulent claim slips through, the system will prevent a flood of subsequent fraudulent claims from exploiting the same vulnerability.
Sophisticated backend claim validation technology ensures that fraudulent claims rarely make it through. ClaimScore’s backend fraud detection system delivers 99.5% precision in identifying valid claims and correctly identifies fraudulent claims 97.5% of the time.
The Future of Class Action Fraud Prevention
Fraudsters will continue to innovate, making it essential for law firms and claims administrators to stay one step ahead. The most effective fraud prevention strategies go beyond the frontend and leverage sophisticated backend tools that monitor and analyze claims in real time. ClaimScore’s scalable, adaptive approach to fraud detection ensures the integrity of the claims process and protects the rightful compensation of legitimate claimants. By focusing on backend detection and continuous improvement, we can safeguard the fairness and efficiency of class action settlements, ensuring that fraudsters are kept out while legitimate claims are honored.
To learn more on how to build a successful class action settlement, check out our new ebook, ”Best Practices in Class Action Claim Validation: A Checklist.”
