Eliminate fraud, not your customers
7 September 2013
Preventing card-not-present fraud while maintaining consumer experience is a challenge, says Richard Harris
As card-not-present fraud continues to evolve, e-commerce merchants are faced with the unique challenge of staying one step ahead of fraudsters in order to protect their businesses from loss.
In the past, fraud was more or less straightforward. Fraudsters stole card details directly from cardholders and tried to use this information to make purchases for gain. Stopping such fraud was also relatively straightforward – simple processes were able to eliminate the majority of fraud losses in a short time.
Today, however, the fraud landscape is far more complex. Social networking, phishing and large-scale data compromises have led to more sophisticated fraud that legacy solutions cannot combat effectively. Account takeovers, where legitimate customers have their accounts hacked and utilised to make orders, return fraud where legitimate purchases are made and counterfeit items are returned and internal fraud, where networks within companies and delivery organisations use their inside knowledge to abuse the system for gain, are just a few of the sophisticated types of fraud going on today.
The old strategies of flagging and manually checking purchase orders that do not fit transaction norms are time consuming and costly for businesses, especially when the vast majority of flagged reviews are from legitimate customers. More importantly, they may lead to a poor customer experience in which the legitimate customer is denied their purchase. In today’s world, where the penalty for failing to live up to a customer’s expectations could mean highly negative comments via social media, one’s brand can quickly be faced with risk.
So how does a merchant ensure online customers are legitimate and make the increasingly complex business of fraud prevention efficient and cost effective while, at the same time, not impacting legitimate consumers and delivering the service that is expected?
Their own data is the answer. The most efficient approach to mitigating new merchant fraud risks is to utilise powerful, second generation automated software solutions to dig deeper and aggregate more specific data, thereby significantly reducing the number of orders flagged and reviewed.
By aggregating and analysing a merchant’s historical account information, solutions such as Accertify Profile Builder can determine in real-time if the individual customer has history of similar purchase behaviour. In this way, new fraudulent activity – such as account takeover – can be more easily stopped, while legitimate customers who do not fit the transaction norm continue to receive uninterrupted service.
By implementing next-generation data summarisation and aggregation tools, merchants can personalise their fraud risk management strategy to their business and their customers to effectively identify and combat card-not-present fraud.
Richard Harris, left, is general manager EMEA at Accertify