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The Fight Against Online Transaction Fraud
In the faceless world of the Internet, online transaction fraud is one of the greatest challenges for merchants. According to the results of the 10th annual CyberSource Online Fraud Report, U.S. merchants lost an estimated $4 billion to fraud in 2008. Advanced solutions are needed to protect merchants from this constantly evolving threat. The
Fidelity can arm you with advanced filters and tools, providing a customizable solution to combat today’s most common types of fraud.
All Merchants Are Potential Targets
Regardless of size, transaction volume or Internet expertise, all e-commerce merchants are susceptible to falling prey to any of the various types of online transaction fraud. Hackers and fraudsters are becoming more sophisticated and skillful at manipulating Internet protocols, Web languages and infrastructures to discover any weakness they can exploit. Thousands of online merchants experience suspicious transaction activity and other types of account abuse each day—and it can happen to you.
Standard Verification Tools Are Not Enough
Standard verification tools developed to assist merchants with screening transactions, such as the Address Verification System (AVS) and Card Code Verification (CCV), though essential, are limited as to the level of protection they can provide. Fraudsters have learned how to interpret AVS and CCV responses and are not usually deterred by the use of these tools. As a result, using these verification tools exclusively for protection against fraud is insufficient. Merchants now need to look to additional, more advanced solutions designed to fight fraud—such as those offered by Fidelity Payment Services.
Common Types of Fraud
Knowing what you’re up against is the key to a strategic defense. Online merchants most often face two types of transaction fraud:
1 - Verification Fraud
The most common type of fraud is verification fraud. Fraudsters can easily obtain or generate potentially legitimate credit card numbers. By submitting orders using a merchant’s payment form, they can determine whether that information is valid. At this point, they are not seeking financial gain, only information. But for merchants who suddenly experience thousands of invalid transactions, the repercussions can be costly.
2 - Settlement Fraud
Once fraudsters have confirmed the validity of a credit card, they can then use it to purchase goods from a merchant. Fraudsters will usually attempt to get a merchant to ship large amounts of a product to a location different from the billing address of the cardholder. Their motive is to steal as much as they can as quickly as possible. By the time the chargebacks come rolling in, merchants are left holding the bag.
Some available features with Fidelity's fraud prevention tools
By supplementing standard payment gateway features such as AVS and CCV, we help create an umbrella of protection for your business. With customizable filters and tools, Fidelity provides you with a greater degree of control over your incoming transactions, and can potentially prevent costly authorization and chargeback fees, as well as the inventory loss that often results from fraudulent transactions. Features include:
- Customizable Filters – Configure filters based on your business’s processing trends.
- Pending Review – Prevent per-transaction fees by holding, reviewing and declining transactions prior to authorization.
- Advanced IP Address Tools – Allow or block transactions from specific IP addresses, regions and countries.
- Suspicious Transaction Search – Use unique filter-specific criteria to search for transactions that have triggered a filter.
- Suspicious Transaction Reports – Intuitive reporting allows you to research transactions that have triggered one or more filters.
- Control Response to Customers – Choose from standard customer responses or create your own response for transactions that have tripped one or more filters.
- E-mail Notification – Receive real-time e-mail notification each time a suspicious transaction triggers one or more filters.
Call us today to get set up with a fraud protection tool customized for your specific needs
Fraud Prevention Tips
- Collect CVC2 and CVV2 verification numbers. According to Visa this can reduce chargebacks by 26% and can reduce any pass-through fees that may be charged when a credit card order is conducted. On the back of MasterCard and most Visa and Discover credit cards is a 3-digit security code located right after the credit card number. American Express cards also have a similar security code that is located on the front of the card right above the cardholder's account number and is usually 4-digits long. The majority of online payment processors support entering security codes when processing credit card orders. This is an extra security measure that merchants can take that will help prevent against fraud.
- Use Address Verification System (AVS). AVS checks to make sure that the address entered on an order form is the same as the address that the cardholder's billing statements are mailed to. People using stolen card numbers will never use the real cardholder's billing address on an order form. Merchants should be cautious of orders with differing addresses *Using AVS will lower processing fees. However, AVS only works with orders that are conducted in the US.
- Be cautious of orders from foreign countries. A large majority of fraudulent orders come from places like the Middle East, Asia, and Africa. Merchants who are victims of fraud are usually out at least the first $50 of the fraudulent transaction. Orders that are for large amounts, pay a lot for next day shipping, or are for several of the same expensive item need to be handled with caution because there is a greater likelihood of fraud.
- If a sale seems “too good to be true” it just might be, contact Fidelity before shipping, we can help validate the legitimacy of the cardholder info for you.
Call one of our professional Fidelity associates to learn more about fraud protection.
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