What Does a Fraud Analyst Do? Your Ultimate Career Guide

Financial fraud is a serious issue that affects individuals, businesses, and institutions. Artificial intelligence (AI) is poised to help professionals supplement their efforts in analyzing data and detecting complex schemes. According to the Federal Trade Commission, scammers alone cost more than $8 billion in 2022, demonstrating the broad scope of the heavy burden financial fraud brings with it [1]. Some examples of financial fraud include high-yield investment fraud, phishing, and identity theft.

Fraud analysts are professionals responsible for protecting others from fraud through the use of data automation tools, quick thinking, and cutting-edge technology, such as machine learning (ML) and AI. With new fraud schemes appearing daily, fraud analysts are critical professionals in staying ahead of these illegal attempts and protecting businesses and clients from the risk of financial loss.

Read more to learn about what a career as a fraud analyst looks like, the average fraud analyst salary, and the types of skills and education that can help you gain entry to the field. 

What is a fraud analyst?

A fraud analyst is a professional who helps monitor financial activities for anything suspicious that might point to fraud. They review bank accounts, accounting paperwork, other documents, and various types of transactions to ensure everything is accurate and complies with the law. Fraud analysts work across various industries, including law enforcement, banking, and government.

Why is fraud analytics important?

Fraud analytics is essential because online banking, shopping, and data transfer and storage are all vulnerable to security issues like phishing emails or hacking. The already staggering sum of money lost to fraud only increases each year. Fraud analytics uses big data analysis techniques to monitor for fraudulent activity and then address that activity in real-time.

With fraud analytics, businesses have the tools to identify fraud before, during, or after illegal activity, which is crucial for minimizing financial losses and reducing the likelihood of future breaches.

What does a fraud analyst do?

In this role, professionals monitor financial transactions, bank accounts, and documents for any potential fraudulent activity. They use specialized software and data analysis to help identify any alarming patterns and often involve law enforcement upon finding evidence of fraud. They help to ensure trust and minimize financial losses for a company and its stakeholders.

Fraud analyst tasks and responsibilities

The specific responsibilities of a fraud analyst vary based on the industry you might work for, but some general tasks to expect include:

• Gather and analyze large amounts of financial data

• Use tools such as data mining and ML

• Conduct investigations to find culprits of fraudulent activity 

• Maintaining analytics systems to help reduce the instances of fraud

• Implement new solutions and processes to increase effectiveness

• Prepare evidence and testify in court concerning any findings

Fraud analysts are the frontline defenders of a bank, company, or institution’s financial data. They are key players in making sure that sensitive information stays protected. Upon finding evidence of potential fraud, fraud analysts work with law enforcement to bring the culprit to justice. Then, they help create new policies to minimize risk and the chance of fraud occurring again.

Fraud analyst skills

Fraud analysts must be extremely detail-oriented and strong problem-solvers to detect fraud among large amounts of data. Skepticism is also helpful in seeing anomalies and suspicious activity that may otherwise be difficult to notice. Some other technical and workplace fraud analyst skills include:

Technical skills

• Experience with fraud detection software and tools

• Programming and database knowledge

• Malware and risk analysis

• Templating and ratios

Workplace skills

• Strong judgment and threat detection skills

• Effective communication skills

• Creativity in problem-solving

• Ability to work alone and as part of a larger team

Fraud analysis and AI

As the advancement of technology has resulted in increasingly complex fraudulent activities, fraud analysts have begun to implement cutting-edge technology like machine learning and artificial intelligence (AI) to help combat these hacking attempts. Fraud analysts use these advanced tools to employ mathematical algorithms to massive data sets and rate their chances of fraud with a risk number. The system then makes a recommendation if the translation looks like it might be fraudulent. 

Then, fraud analysts take over and either open an investigation or approve the transactions. AI allows fraud analysts to do the more high-level parts of their job without spending much time and money on the more menial task of sifting through data.

Fraud analyst salary and job outlook

Fraud analysts make an average annual base salary of $53,290, potentially earning more through bonuses and other forms of additional compensation  [2]. Because of the essential role financial analysts play, the job outlook remains promising, with demand largely expected to remain steady or grow in the coming years. The federal government employs the majority of fraud analysts, but others work in hospitals, education, and banking. 

Fraud analyst career path

The fraud analyst career path can provide various opportunities for you to grow and advance. After spending several years in an entry-level fraud analyst position, you can either continue within the fraud analyst career ladder, gaining more responsibility and money as your title changes, or you might move into other roles, such as consultant or finance manager.

To get started down the path of a fraud analyst career, take time to look at different fraud analyst job descriptions to learn what common skills or qualifications employers tend to look for. Then, you’ll be able to compare those requirements to your skill set and determine if you need additional training or education before applying.

Education and training

The majority of employers prefer fraud analyst candidates who have a bachelor’s degree. Criminal justice or computer science are two options to consider, but anything that allows you to learn about data analysis or fraud detection is helpful. Once you’ve gained a job as a fraud analyst, you’ll likely spend about a year training on-the-job in the specifics of the industry you’ve chosen.

Certifications

Some employers may prefer hiring someone with credentials on their resume, or you may want to bolster your skills by earning a certification. The Certified Fraud Examiner (CFE) credential from the Association of Certified Fraud Examiners. Doing so provides demonstrable proof of your knowledge in areas like resolving fraud allegations, investigative techniques, and how to build programs to combat fraud. If you gain information security experience, you may pursue ISACA’s Certified Information Security Manager (CISM). During preparation for the CISM exam, you’ll gain a deep foundation in security risk assessments, governance, and more.

Getting started with Coursera

Sharpen your data analysis and fraud detection skills while learning about the details of a fraud analyst career with courses and degrees on Coursera. Options like West Virginia University’s Forensic Accounting and Fraud Examination or the University of Pennsylvania’s AI Applications in Marketing and Finance are great options for learning more about fraud analysis. You’ll gain an introduction to foundational knowledge and essential skills valuable to moving your fraud analyst career forward.