Just last decade ago, a fraudster had to visit a physical location to buy goods using a compromised credit card. Credit card fraud happens every day. Today, fraudsters have started using compromised credit card numbers to buy online, and shipping the same to the forwarding address. However, this approach carried a lot of risks for the fraudsters since they had to ship the goods to the customer and at the same time contacting the carrier to put the goods on hold which were to be picked up later.
A huge risk liability for merchants
Traditional physical purchases have been transitioned to the Card Not Present (CNP) mode, the liability has also been shifted from the credit card company to the merchant. Every online transaction, be it shipped goods or pick up in store, require an email address. A competent fraudster is incentivized to use a real, valid email address, as he will need to be able to track their purchase.
More importantly, when a customer buys an item online and picks it up at the store, a confirmation email will often be their proof of purchase, a frictionless way of proving they’ve purchased the item they are trying to claim. Since we see a higher risk category of items that are picked up in store, high risk merchants need to deploy specialized controls to tackle these trends, Under high risk product category, special types of controls needed to be deployed that includes delivery speed, product category, delivery type, and product SKU. Digital products are the easy targets for fraudsters since these products need not be picked up with risks at minimum levels.
Today customers have the convenience of buying the products online and picking up their articles at a nearby store. In recent times retail sales have dampened whereas buying online, pick up in store — BOPIS — has become an easier route for retailers to generate incremental sales as consumers visit stores to collect their articles and then impulsively shop. But with every pro, there is a con. According to a survey one out of top five retailers, purchases made online and picked up in-store are three times riskier than general e-commerce transactions, It has also been noted that chip and signature credit cards that are used to eliminate in-store fraud do not provide any protection when the card is not present which has led to an increase in online credit card fraud. Fraud attacks have doubled since the Q1 2016 to the Q1 of 2017. The major reason for the rise in BOPIS Fraud is that customers want everything at the earliest. Nobody wants to wait in today’s times.
While Retailers are still wandering to reduce the risk from fraud, fraudsters have become more technologically sophisticated, automated attacks to give it a shape as an organized retail crime which retailers are finding hard to keep up. Multichannel retailers have appointed third-party providers of payment fraud prevention platforms who tends to offer more sophisticated machine learning automated processes which helps retailers to determine the legitimate identity of online purchasers and if the payment method they are trying to use is linked to them and has the funds available for payment. This not only reduces their exposure to fraud but also reduces costs and increase sales and customer satisfaction levels. This also helps retailers to focus on and invest in key priority areas such as marketing and operations of the organization. Third parties have comprehensive databases that they can look at so many transactions than an average retailer which helps them to make comparisons that include figuring out the changing types of fraud arising on the network.
Almost every automated platform can detect key data on a real-time basis in the form of reviewing email addresses. If those email addresses are less than 90 days old, it triggers a risk signal but if an email address is just a few days old, it will trigger a very high risk signal. Reverse Phone Lookups is another mechanism to determine whether a phone number is connected to the name of the person making the online purchase and detect whether any IP proxy is associated with the transaction.
Besides this, the platforms can also verify the whether the name connected with an address is the same as of the person trying to initiate the transaction. It also helps to identify whether its non-fixed VOIP phone or a prepaid phone that is being used to make the transaction. Platforms have the capability to identify Buying behavior patterns of honest shoppers versus fraudsters Platforms can determine if customers are actually shopping for an item online — particularly high-ticket items which indicates detailed reading reviews, comparing prices, etc. versus briefly visiting that item and buying it. Manual reviews have been used by the third parties to verify high-risk transactions before products shipped have been dropped significantly as a result of using these tools. With some companies, Some retailers have achieved zero fraud record due to use of manual reviews by the third party and also taking the responsibility for any losses. Some third-party vendors have not just reduced chargebacks, but also chargeback rates, thus lowering the fees that retailers had to pay to banks and credit card companies once their chargebacks reached or exceeded 1 percent.
Platforms can be easily integrated with existing systems and can be configured to meet consumer requirements. Retailers can also reduce the decline rate of transactions mistakenly labeled high-risk. With decline rates drop and quick acceptance of orders, results in a better customer experience.
Learn More about iPayTotal Secure Payment Services To Fight Credit Card Fraud Today
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