Identify and thwart credit card fraud online
While the increased adoption of EMV chip card enabled payment terminals is expected to reduce instances of card present fraud at the point of sale, the technology does not prevent credit card fraud conducted online. In addition to implementing secure technologies like end-to-end encryption and tokenization, there are simple things merchants can do to identify and help thwart fraudulent activity online.
Let’s begin by identifying a few of the most common types of online payments fraud:
- Stealing card information, including cardholder names, account numbers, and expiration dates, and using this information to make fraudulent online transactions.
- “Testing” cards by making small transactions at trusted businesses or organizations.
- Intercepting packages of products purchased using stolen card information.
Next, let’s explore the steps you can take to thwart these types of fraud scenarios.
- Merchants can take a few steps to help combat online use of stolen card information. The first is to use a payment solution that uses an address verification service (AVS) and requests card security codes (the small digits located on the backside of payment cards). Together, these features help verify that the purchaser is the cardholder.
- Card testing is a common way for thieves to check which cards have already been reported to issuers as being stolen, and those that haven’t (and would then be easy to exploit). AVS and card security code verification during checkout can help deter card testing activities because these steps can slow down the transaction, making your site less attractive to thieves who expect immediate gratification. You can also thwart card testing by using a solution that monitors device, IP address, and IP geolocation velocity for irregular purchase activity based on defined thresholds. Additionally, you can mitigate card testing attacks with a payment solution that identifies each buyer’s device and true IP address that exists behind a web proxy.
- Stealing packages that are ordered online may seem archaic, but it’s not outside the norm of fraudster’s tactics. Merchants incur the costs of lost goods, chargebacks, and refunds. Techniques to tackle this type of fraud include flagging potentially risky orders (such as large inventory of small ticket items) for manual review prior to shipping, and contacting cardholders directly to make sure they indeed placed the order. Also, be sure to require the customer’s billing and shipping address – and if they don’t match, find out why (ie., is the item a gift or being sent to a different address occupied by the cardholder?). Finally, implement a product cap and flag shipping addresses that exceed that cap.
Payment card fraud is not going away, but merchants can mitigate their risk by implementing the right security technology, and following best practices. To find out how Vantiv can help protect your business from credit card fraud online, contact us.