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This is Not The Wall – Merchants Can’t Take a Chance on Fraud

posted on: Wed Mar 01 2017

Wild, unpredictable and fast moving – sounds like the makings for good TV, right? It’s also generally the way fraud happens. It’s unpredictable and non-linear… much like the new game show, The Wall. If you’ve not caught this new updated version of everyone’s old-school favorite, Plinko, this popular game show is actually a lot like the wall
fraud. Merchants are vulnerable to fraud, but unlike the game show, merchants can’t afford to play this game without severe losses. And, there is no contract to sign that guarantees you winnings – the stakes are much higher than that. According to the U.S. Justice Department, credit fraud now costs businesses $5.5 billion a year, with the bulk of that coming from online transactions.

There’s hardly a day that goes by without a new story about data breaches, illegal hacking and identity theft. No entity seems to be immune – from small banks to large retailers, organizations of all sizes and industries are affected. Criminal fraudsters are illegally getting access to millions of consumer credit cards and private data – and that data sells for cheap (from $1 for a credit card and up to $300 for a bank account).

Remember how I mentioned The Wall as an opportunity to sign a contract to guarantee a win? Much like that theory, merchants can follow their own set of rules to fight fraud.

So how do merchants stay ahead of the game? Let us Kount the 10 ways.

  • Know the origin of a transaction. Is it coming from a computer or mobile device? This is an important distinction and the first step in properly identifying and preventing fraud.
  • Furthermore, identify what type of mobile device is being used. Different mobile devices have different fraud and purchase profiles. Android or Apple? Mobile app or mobile browser? Knowing these details will bring you one step closer to stopping fraud.
  • Pinpoint the “real” location of the mobile device. Mobile devices often use proxy IP addresses or connect through carrier network IPs. If you lack the ability to gather actual location data, fraudsters have another opportunity to mask their activity.
  • Associate other transactions with the device. This capability is called “order linking” and can reveal if a mobile device involved in a transaction has been associated with prior fraudulent behavior.
  • Identify any disconnects between in-store and online. Fraudsters know there’s often a disconnect between merchants’ online and in-person teams and exploit the opportunity by infiltrating brick and mortar stores through strategies like “click online and collect in-store.” Fraudsters can use this to their advantage, avoiding the extra barriers due to EMV, easily purchasing items via a fraudulent card-not-present or mobile transaction and simply strolling into the store to pick up the ill-gotten merchandise.
  • Know your customers. Retailers have to be able to tell the difference between normal customer behavior and suspicious behavior. Is a customer who normally buys smaller items suddenly buying big ticket items? Has their delivery address changed? Are they accessing from a mobile when they normally access from a laptop? All of these signs, and more, can be indicators that a transaction might be fraudulent.
  • Evaluate if your organization has expertise, resources, time, and money to develop its own fraud solution. Developing an in-house fraud solution can be costly and time-consuming. Evaluate your resources and plan accordingly.
  • Challenge chargebacks. Chargebacks go hand in hand with card-not-present fraud. It can be difficult for merchants to successfully challenge chargebacks, leading merchants to get the double whammy of losing goods and then losing money from the subsequent chargeback fee. Early warnings of chargebacks and disputed transactions can give retailers the chance to challenge them with confidence.
  • Don’t be complacent. You can’t expect to get exceptional results from security and anti-fraud measures that haven’t been updated in years. Constantly monitor and review your anti-fraud measures to make sure they are up-to-date.
  • Finally, be aware of your own limitations. Many merchants aren’t experts in detecting let alone preventing fraud (nor are they expected to be). That’s why it’s so important to have a third party expert evaluate your systems to ensure you have the right protections in place.

Follow the above tips to get a handle on any losses your business is experiencing due to fraud. Let’s keep the wild, unpredictability of losing money for the game shows, ok?

Uncover Mobile Fraud Before It's Too Late

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