high risk payment processing blog

Online Fraud Trends (and How to Stay Ahead of Them)

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With ecommerce steadfast in its growth, online fraud is following suit, and fraudsters’ tactics are becoming increasingly sophisticated. At High Risk Match, we understand the importance of staying ahead of these evolving threats. By knowing the types of fraud you’re likely to face and equipping yourself with the best solutions, you can secure your business’s future and protect it from whatever comes your way.

Know What You’re Up Against

Fraudsters are always on the prowl, and with them comes a slew of potential threats. However, understanding these threats will help you better equip yourself to circumvent their tactics and keep your business safe. Here are some of the types of fraud to watch out for:

Clean Fraud

Clean fraud is initially difficult to detect as fraudsters use stolen customer information that has been “scrubbed” and validated to appear consistent with the actual customer. Typically, they have more than one piece of information, such as the card number, name, and address associated with the account.

Friendly Fraud

Also known as chargeback fraud, friendly fraud occurs when someone makes an online purchase and later disputes the charges with their credit card company instead of requesting an exchange or return from the merchant first. This type of fraud can account for 40-80% of all fraud losses, resulting in chargebacks, lost goods, and double refunds.

Refund Fraud

In refund fraud, fraudsters exploit the refund process by making purchases and then asking for a refund (claiming the items are either damaged or undelivered) once they receive them. They have no intention of returning the items, so they end up with both your inventory and your money.

Payment Fraud

Hackers steal customers’ sensitive information and use it to make online purchases or create new accounts. Sometimes referred to as identity theft, payment fraud is usually only discovered once the customer disputes the charges and chargebacks are issued by the bank.

Phishing

Phishing is one of the most common ways fraudsters access sensitive information. They typically use email or text messages to act as an authentic merchant, redirecting clients to illegitimate websites to capture their credentials. This data is later used to make fraudulent purchases.

Credit Card Testing

Fraudsters use card testing to determine the validity of multiple (even hundreds of) stolen credit cards at once. Using a merchant’s checkout page, through a script or a bot, they verify the stolen information based on whether the transaction is approved or declined. This also allows them to scrub the data for later use in clean fraud, resulting in a dangerous (and costly) cycle of stolen data, and loss of revenue and customer trust.

Be Steps Ahead with Fraud Protection Tools

Adding multiple layers of security is one of the easiest ways to minimize losses and improve customer experience. At High Risk Match, we offer a comprehensive range of online fraud protection tools designed especially for small to medium-sized businesses. Here are some key tools to consider:

Standard Tools

Card Verification Value (CVV)

The CVV is a unique three or four-digit number assigned to each credit card, which confirms the customer knows the code or has the card in hand. Requiring CVVs adds an extra layer of security, helping to cut down on clean fraud and ultimately reducing chargebacks, manual reviews, and false positives.

Address Verification Service (AVS)

The AVS verifies the information exchanged between merchants and card issuers before the transaction is authorized. It matches the mailing and/or billing address provided by the cardholder to that linked to the card.

Advanced Tools

Card Tokenization

Tokenization replaces credit card details with a unique identifier (the “token”), ensuring sensitive data is not stored by the merchant. This helps decrease threats such as phishing, payment fraud, or identity theft. Tokens can be used for later transactions, while data is securely stored.

High Risk Match Vault

Our Vault resides on the High Risk Match Gateway to securely store data, including tokens and customer information. Merchants can create customer profiles to facilitate future transactions and update records and information in real-time.

Hosted Tokenization (HT)

Similar to tokenization, HT collects credit card information on the merchant’s behalf, and a token is returned to complete the transaction.

High Risk Match Essential

Our advanced fraud protection platform is designed with you in mind. Essential uses artificial intelligence (AI) to assess customer transactions in real-time, giving you the ability to approve or decline transactions based on predetermined risk parameters. This solution offers fully automated order decisioning, lowering the risk of refund fraud, chargebacks, and false positives.

3-D Secure 2.0 (3DS 2.0)

The industry standard for reducing instances of fraud during card-not-present transactions, 3DS 2.0 provides real-time authentication of the customer to their card issuer, and shifts liability to the issuer for authenticated transactions. This improves checkout speed, security, and cart abandonment rates while reducing occurrences of credit card testing.

Strategize to Thrive

Plan, protect, and prevail. Preventing ecommerce fraud can be simple and easy. Sure, there are many ways fraudsters can intrude, but with an effective fraud strategy and the right safeguards in place, you’ll be able to lock them out (and keep them out). And although there is no one-solution-fits-all approach when it comes to fraud protection, there are effective ways to mitigate their tactics:

Stay Attentive

Knowing your clients and understanding their habits will help you stay on top of any irregular activity and tip you off if something is illegitimate. Higher purchase amounts than normal, using multiple credit cards, or various attempts at purchasing are all reasons to be suspicious of a sale. More often than not, if it doesn’t feel right, it’s not.

Create a Multi-Layered Shield of Defense

Reinforcement is key. One of the most effective ways to keep threats at a minimum is to layer your prevention tools. High Risk Match allows you to customize your approach, set transaction amount limits, and implement auto-decisioning in Checkout. So, if a transaction doesn’t pass the first check (or layer), it is automatically declined, making it harder for fraudsters to infiltrate your secure system.

Triumph Over Trends

Set yourself up for success and boost sales with a fully-integrated ecommerce solution that comes with the full stack of options, so you can build a strong, nearly impassable system. Implement the right tools and safeguards today and get back to what really counts—your bottom line.

Take advantage of solutions like High Risk Match and enjoy the freedom of growing the business you’ve always envisioned. Stay ahead of online fraud trends, protect your business, and secure your future with High Risk Match.

For more information on how High Risk Match can support your business, contact us today.

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Meta Description: Stay ahead of online fraud trends with High Risk Match! Discover detailed insights and advanced tactics to protect your ecommerce business from sophisticated fraudsters.

Keywords: online fraud, ecommerce fraud, fraud prevention, fraud protection tools, High Risk Match, secure transactions, card-not-present fraud, identity theft, chargebacks, fraud trends

Tags: #OnlineFraud #FraudPrevention #EcommerceSecurity #HighRiskMerchant #SecureTransactions #Chargebacks #IdentityTheft #FraudTrends

high risk payment processing blog

What are the most effective fraud prevention techniques?

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Every year, small businesses lose millions to fraud. From online scams to in-store deceptions, fraudsters have many ways to target businesses. But don’t worry! Here are some common signs to look out for and easy steps you can take to protect your business from fraud.

Ecommerce and Card-Not-Present Scams

With more sales moving online, card-not-present (CNP) transactions have become a significant source of fraud. CNP transactions include payments processed online, over the phone, or through the mail.

The 3 E’s of Card-Not-Present Fraud Prevention:
  1. Expensive: Watch for unusually large orders, especially if a regular customer suddenly makes a much larger purchase than usual.
    • High-ticket items are particularly attractive to fraudsters because they can be resold easily.
    • If a loyal customer places an order that is significantly higher than their usual spending, verify the transaction through a quick phone call or email.
  2. Express: Be cautious of customers who request express delivery. Fraudsters often use fast shipping to receive goods before the fraud is detected.
    • They might request next-day or same-day shipping to reduce the time you have to catch the fraud.
    • Always cross-check shipping addresses, especially if they are in high-risk areas known for fraud.
  3. Extra Cards: Be wary of customers using multiple credit cards for a single purchase. This can be a sign of stolen cards.
    • Multiple cards used for a single purchase often indicate that the fraudster is testing which cards work.
    • If you notice different cards being used for multiple small purchases, this could be a precursor to a larger fraudulent transaction.

Other Types of Online Scams

While credit card fraud is common, other online scams can also harm your business.

Malware

Malware, or malicious software, aims to infiltrate your computer to steal personal information. It can come from spam emails, fake websites, or pop-up ads.

How to Protect Against Malware:

  • Install and update a reliable virus scanner: A robust antivirus software is your first line of defense. Make sure it’s always updated to catch the latest threats.
  • Access websites by typing the URL directly into your browser: Avoid clicking on links in emails, especially from unknown senders.
  • Be cautious with “free” downloads: Freeware and shareware sites are common places for malware to hide. Always download from reputable sources.
  • Avoid pop-up ads: Pop-ups can contain malicious software. Use a browser with built-in pop-up blocking capabilities.
Phishing and Smishing Scams

Phishing uses fake emails, while smishing uses text messages to trick you into revealing personal information.

How to Protect Against Phishing and Smishing:

  • Legitimate organizations won’t ask for personal information via email or text: Be skeptical of unsolicited messages asking for sensitive information.
  • Check for spelling and grammar mistakes: Errors in these areas can be a giveaway that the message is not from a legitimate source.
  • Hover over links to preview URLs before clicking: This can reveal if the link is directing you to a suspicious site.
  • Use verified contact information: If you receive a suspicious message, contact the organization using information from their official website, not from the message itself.
  • Be cautious with social media: Only accept friend requests from people you know to avoid falling victim to social engineering attacks.

Predictive Fraud Prevention Tools

Modern tools like Kount Essential can help detect fraud before it happens. These tools monitor your ecommerce site for suspicious activity and can automatically decide on orders.

Benefits of Predictive Tools:

  • Real-time monitoring: These tools analyze transactions as they happen, looking for patterns that indicate fraud.
  • Automated decision-making: They can approve, deny, or flag transactions based on risk levels, saving you time and effort.
  • Detailed reporting: Gain insights into your transaction data, helping you understand and combat fraud trends.

In-Store and Card-Present Fraud

Fraud can also occur in face-to-face transactions. Here’s how to spot and prevent it.

The 3 C’s of Card-Present Fraud Prevention:
  1. Customer Behavior: Watch for nervous customers or those making unusual purchases.
    • Nervousness: Customers who appear anxious or hurried may be trying to avoid detection.
    • Unusual Purchases: Be suspicious of customers buying high-value items that don’t fit your store’s usual purchase patterns.
  2. Card Entry and Handling: Be aware of customers repeatedly entering their PIN or using multiple cards.
    • Repeated PIN Attempts: This could indicate a stolen card where the fraudster is guessing the PIN.
    • Card Security Features: Check for holograms, signatures, and other security features on the card.
  3. Card Acceptance Best Practices: Follow secure procedures like using Chip & PIN or contactless payments.
    • Chip & PIN: Always use chip-enabled terminals for added security.
    • Contactless Payments: These are quick and secure but have transaction limits to reduce risk.
    • Manual Entry Risks: Avoid manually entering card details, as this bypasses many security features and increases fraud risk.

Secure Payment Methods:

  • Contactless Transactions: Fast and secure, reducing physical contact with the card.
  • Chip & PIN Transactions: Provide a higher level of security than magnetic stripe cards.
  • Swiped Transactions: Only use when necessary, and always verify the signature and card details.

Mail and Phone Scams

Scammers can also target businesses via mail and phone. These scams might involve fraudulent orders, fake domain renewal notices, or bogus government calls.

Common Mail and Phone Scams:

  • Phone Orders with Pickup: Fraudsters may use a stolen card for a phone order and send someone else to pick it up.
  • Fake Renewal Notices: Scammers send notices about domain renewals or business listings to trick you into paying them.
  • Impersonation Calls: Fraudsters may claim to be from the government or a reputable company, urging you to take immediate action.

How to Prevent Mail and Phone Scams:

  • Verify Orders: Require the physical card for pickups and confirm the identity of the person collecting the merchandise.
  • Review Notices Carefully: Check the authenticity of renewal notices by comparing them with your records.
  • Educate Employees: Train your staff to recognize and handle potential scams. Ensure they verify details before processing sensitive transactions.

Stay Informed

Creating a fraud prevention strategy is crucial to protecting your business. By staying informed about the types of scams and taking preventive measures, you can safeguard your hard-earned success.

Key Takeaways:

  • Regular Training: Educate your employees on the latest fraud tactics and prevention methods.
  • Use Technology: Implement predictive fraud tools and keep your antivirus software updated.
  • Stay Vigilant: Monitor transactions closely, especially those that seem out of the ordinary.
  • Build a Fraud Prevention Strategy: Develop and regularly update your fraud prevention plan to adapt to new threats.

For more information on how High Risk Match can support your business, contact us today.

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By understanding the various ways fraud can occur and taking proactive steps, you can significantly reduce the risk of your business falling victim to fraudulent activities.

Meta Description:

Protect your small business from fraud with our comprehensive guide. Learn how to identify and prevent common scams, including ecommerce, malware, phishing, and in-store fraud.

Tags:

Fraud Prevention, Ecommerce Fraud, Card-Not-Present Scams, Malware, Phishing, In-Store Fraud, Small Business Security, Fraud Detection

Keywords:

fraud prevention tips, prevent fraud in business, ecommerce fraud prevention, malware protection, phishing scams, in-store fraud detection, small business fraud prevention, card-not-present scams