Fraudsters, Scammers and Thieves, Oh My. – 7 Tips for Preventing Online Fraud
Brick and mortar business, catalog sales and e-commerce are not the only retail metrics that spike during the holidays. So do losses from in-store theft and cybercrime. While most businesses have some type of brick and mortar security in place, many are not prepared for the onslaught of online crime—a risk that is growing by the minute as more people buy online. Disgruntled teenaged hackers and scammers still exist, but a much greater threat now comes from large, highly organized crime rings like the RBN (Russian Business Network), and other big Eastern European, African and Asian fraud organizations. These groups operate 24/7 illegal businesses around the world, and use sophisticated technology to steal millions of dollars…every day. According to The Nilson Report, the U.S. leads the world in payment card losses, which totaled $3.56 billion in 2010. Online fraud has a significant financial impact on retailers. Not only do they take a hit on the lost goods or services, they have to pay chargeback fees to their banks and credit card processors. If the fraud problems are significant and ongoing, retailers can lose their ability to accept credit cards altogether. With online fraud growing by 20% each year, retailers need to invest in more technology tools to mitigate their risk. Systems that identify the “true” identity of the device at the other end of a CNP (card not present/customer not present) transaction, and others that can perform real-time risk evaluation on all ecommerce transactions will help protect merchants’ profits and their brand. Most fraud prevention solution providers will tell you that there is no silver bullet to solve your online fraud problems. A multifaceted strategy is needed that includes multiple technology tools, ongoing training and new business processes working in concert to help safeguard retailers from CNP fraud, phishing attacks and other cyber scams. With that said, here are: 7 Ways to Help Prevent Online Credit Card Fraud
With suspicious transactions, call and or e-mail the customer to verify their information before you process the order.
Use Address Verification Service (AVS) to ensure information provided by customer matches information the card issuing bank has on file.
Require credit card CVC2 and CVV2 verification numbers and expiration dates.
Be wary of orders that are from outside the U.S.
Be cautious about orders that use a free email address.
Check mailing address with negative lists of past chargebacks and fraudulent behavior.
Use rule-based and predictive fraud prevention systems that give your fraud and risk analysts the tools to automate many of the above processes and alert you to potentially risky orders.
There are many software providers that offer a variety of fraud and risk management solutions. Systems include Device Verification, Fraud Workflow Tools, IP Geo-location and Chargeback Management. The Merchant Risk Council, an organization whose mission is to “make e-commerce more efficient, safe and profitable,” provides a pretty comprehensive solution provider list. In Green Day’s popular CD 21st Century Breakdown, Billy Joe Armstrong sings “do you know your enemy?” – which could be the anthem of Loss Prevention organizations across the industry. As retailers battle enemies, both visible and anonymous, during a busy holiday season, they are working harder than ever to keep fraud in check, because clearly the criminal element is growing more sophisticated. – Jack