How to Fight Fire With Fire to Defeat Fraudsters

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Fraud fraud management

Fight_fraud2x.pngWhat do Delaware, Oregon, and Florida have in common? According to an analysis by Experian, these are the states with the highest  fraud related to billing and shipping from card-not-present (CNP) transactions. If you’re an ecommerce business trying to combat this kind of fraud, you should perhaps pay extra attention to orders with billing or shipping addresses in these states. And if you get orders from South El Monte, California, look out. Experian identified this city as having the highest incidence of both billing and shipping fraud—with 1 percent and .64 percent respectively of all orders from that municipality found to be fraudulent.

Outside of these hot spots, the report found that all regions of the country experienced an increase in both billing and shipping fraud last year. The primary cause for this increase is most likely the steady transition over the course of 2016 to the more secure EMV cards—those with the chip that you now insert into the terminal rather than with a magnetic strip that you swipe. Recently, Visa released data reporting its cardholders made more than 1 billion transactions using chip cards in March, nearly three times more than March 2016. These cards make point-of-sale (or card present) fraud more difficult which, as was expected, has driven fraud online.

The Experian study also points to the wealth of stolen personal and payment information available to fraudsters in various dark corners of the internet as a contributing factor. In 2016, the number of data breaches increased 40% over 2015, according to the Identity Theft Research Center.

Fraudsters are relentless and their methods are constantly evolving. As the good guys come up with new ways to fend off fraud, fraudsters change their tactics. But they’ll never give up, as long as their efforts produce results. Knowing this, as an e-commerce merchant, you need to arm yourself with an effective, automated fraud solution—to fight fire with fire. Fraudsters have their weapons—you need yours.

The best approach is a multi-pronged one that utilizes automated tools to flag potentially fraudulent transactions. Whether based on location, email history, abnormal device behaviors, or unusual purchases—there are many telltale signs to be on the lookout for. To battle fraud effectively, you need up-to-the-minute expertise on the latest fraud trends, tactics, and telltale signs.

It’s also true that a growing share of CNP transactions originate from mobile devices. One recent study predicted that 60% of global online sales would be made via mobile devices by 2019, which means that any fraud prevention tactics must also be adapted for the idiosyncrasies of the mobile channel. In particular, because consumers are now using multiple online devices—from computer and smartphones to tablets and connected TVs—it’s more difficult for merchants to identify the customer based on the device they’re using, which makes the transaction harder to readily approve.

Last year, Recurly partnered with Kount, a leading provider of fraud management solutions, to identify and handle potential fraud. Our customers can choose from a preselected set of rules which are based on the latest known trends and tactics being used by fraudsters, and they can decide how aggressive or lenient they want to be in dealing with potentially fraudulent transactions. Custom rule settings are also available to companies that want more control.

Visit our website to learn more about Recurly’s fraud management. Or speak to a Recurly expert at (844) 732-8759

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