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Online Fraud Management Solutions that Could Save Your Business

Online Fraud Management Solutions

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Whether you run a small e-commerce business or are the owner of a large retail chain – no one is safe from fraud. Especially not in the world of online business. As technology keeps taking a step towards advancements on a daily; it keeps opening new doors for fraudsters to come up with new methods to hack their way into the market.

This brings about the most important question, how does one tackle online fraud?

While online and mobile shopping has made its way into our daily lives, this means a majority of our payments are with our credit/debit cards. The customer’s perspective would be that the easiest way to pay for their online purchases is through their cards; most frauds make purchases without a physically present card.

However, setting your monetary losses aside, fraud can have a massive impact on your brand image and reputation in the market. With the help of the correct strategy, combined with ideal anti-fraud tools, you can minimize the risk and prevent fraudulent activities.

Here are some ways businesses can adopt for easy online fraud management:

Firstly, What is Payment Fraud?

As the title states, payment fraud is basically any illegal online transaction. In this case, the victim isn’t you or your business, it’s usually an innocent consumer from which the fraudster stole their sensitive information – credit card data, identity etc.

Payment fraud can be considered by multiple actions – lost/stolen items, unauthorized transactions, and false requests for a refund. With a massive boom in the amount of online transactions with credit cards, it comes as no surprise that there now is a significant increase in fraudulent or unauthorized activities as well.

What Are the Different Types of Online Fraud Out There?

Cybercriminals not only steal information, but they also happen to make their way through to the security systems in search for glitches or spots in the system that may have been overlooked or not updated for a while.

Here are some of the most common types of payment fraud:

Card Theft

The most common kind of fraud – stolen credit card information used to make online purchases. This includes details like card number, expiration date, account title, and CVV/CVC.

Customer Identity Theft

Another quite common form of theft from the list of many other online fraud activities; customer identity theft. The cybercriminal obtains the personal key details of a user and uses them to make a purchase. If they successfully gather all required information off of a customer, they can easily bypass the fraud detection firewalls and escape.

It might turn out to be completely unrecognizable if the cybercriminal obscures the genuine cardholder details like their verification credentials or the 3D secure codes. This is called a clean fraud as it becomes almost impossible for the merchant to detect the crime while it’s being committed.

Merchant Identity Theft

This happens when a cybercriminal sets up a merchant account which is similar to that of a legit business. With this they can charge an order on stolen cards and disappear before the cardholder realizes and the owner doesn’t know at all.

Friendly Fraud or False Demand for a Refund

This is the worst type of fraud to happen as it is not even close to friendly fraud. Friendly fraud refers to when a supposed cardholder files for a chargeback instead of requesting for a refund. Rarely, the reason could be that the action was taken as a result of a customer’s confusion or by mistake.

Legit Fraud Management Solutions for Merchants

If you do it correctly, and take the measures you need to after analyzing your business thoroughly you can minimize the risk of hackers bringing your site down.

Here’s a list of things you can do to prevent and lower the risk of fraud:

  1. With the help of an Address Verification Service (AVS), you can verify whether a purchase was made by the original cardholder or not.
  2. Be extra vigilant by tracking IP addresses, card numbers, and other elements to detect fraudulent transactions instantly. Also, make it a habit to closely observe each order that was placed. Before dispatching each order, keep a close eye on the card details that were used to place an order in case you come across a repeat attempt by the same card or some other suspicious activity.
  3. Be on the lookout for some Anti-fraud tools. It is better if you find a set of tools that allow you to adjust the settings according to your industry instead of applying the same generic settings to every business model. This is because the system may even filter out legitimate transactions as they were suspicious according to a basic scoring solution.
  4. In order to save yourself from payment fraud, acquire Machine learning and AI from your payment providers. These technologies come equipped with built-in solutions that assist in detecting fraud within seconds. This is way better than sticking to old patterns that have become static over the time.
  5. Adapt to a routine that involves a regular Velocity check and smart behavioral tracking. This enables your system to detect suspicious behavior instantly, and gives you the time to take the required actions.
  6. You can manually tackle risks by undergoing a minor review every now and then. Keep track of any potential risks by flagging them and later verifying the order by contacting the cardholder.
  7. Make it compulsory to set a strong password for your customers. The longer and more complex each password is, the lower the risk for cybercriminals to figure them out and use their details elsewhere.
  8. Keep yourself updated with the latest fraud trends and hacks to prepare yourself mentally to take them on. Or even set up precautionary steps to lower the chances of any of them to occur.
  9. Opt for a Verified payment processor as they can help simplify the whole fraud detection process. However, you might need to check ahead of time if that is a part of their services.
  10. Thoroughly run security checks and keep your software up-to-date.

Your network security systems need constant updating to ensure the data stored to your website is secure. Alongside which you can add data encryption as it adds extra security for the emails and transactions.

Lastly, it is important for each and every online business to understand the extra costs that they may have to bear for this. This may include chargeback fees, fraud investigation, or merchandise distribution etc. However, the biggest price you may have to be would be customer loyalty and other non-financial costs that would damage the image of your brand/business.

This is why it is important to draw an outline around your business priorly, to make sure your website is protected at all times and you ensure a safe and happy transaction all the time!

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