The Top 10 Criminal Fraud Prevention Tools You Need!
The eCommerce market is a complex and often dangerous place for merchants. There are tremendous opportunities to expand your business, but expansion also means exposure to new threats. You can protect yourself against criminal fraud, though, with the right fraud prevention tools at your disposal.
Deciding on the tools you need isn’t always easy. Then again, it’s not enough to rely on just one or two tools to defend yourself. That’s why we’ve pulled together a list of the ten most important criminal fraud tools on the market.
Geolocation is one of the best tools at your disposal for fraud detection. When a buyer submits a new order, geolocation technology pinpoints the user based on the IP address associated with the order. Comparing the user’s IP address against the information on-file with the issuer allows you to verify whether the buyer placed the order from a reasonable location.
The technology is not infallible, as a buyer could make a purchase while traveling outside the country. However, geolocation-based fraud detection tools are a helpful data node in the fraud scoring process. For example, a buyer located in Indonesia, but using payment information from a US cardholder, raises a red flag.
Of course, geolocation can be fooled when criminals use proxies to try and disguise their IP addresses. This makes it harder to both flag transactions for review based on IP address, or to trace a fraudster’s location. One way to contend with this threat is with proxy piercing technology.
Device fingerprinting is a forensic technique used to identify each purchase on the device used. The tool gathers unique information based on the hardware and software installed on a device that visits your site. Each piece of data helps create a unique picture of the device, like the lines of a human fingerprint.
Device fingerprinting gives you the ability to block devices associated with bad actors. You can also pinpoint the kind of suspicious activity that could suggest fraud tactics like account takeover.
AVS, or Address Verification Services, is like geolocation in some ways. But, while geolocation tracks IP address, AVS-based fraud prevention tools examine the billing information provided by the buyer.
AVS compares the billing address provided by the buyer against the address on-file with the card issuer. If the buyer can’t provide the correct billing address, you should take that as another fraud red flag.
Of course, like any other tool, AVS is not perfect. A fraudster might be able to provide a valid address, while a legitimate customer could simply provide the wrong information due to a typo or lack of attentiveness.
Fraud scoring begins by examining a transaction based on multiple fraud indicators. This helps generate a composite “score” indicating the amount of risk that transaction represents.
Including fraud scoring among your fraud prevention tools allows you to automatically reject transactions that raise too many red flags. For that to work, though, you'll need to apply dynamic rules to the process. The level of risk posed by a transaction can change based on factors including:
- Product Category
- Sales Channels
This can make the fraud scoring setup very complex. While effective, it remains a process best left to professionals.
Assume a customer makes a purchase, but later wants to modify the order by changing the shipping address. A fraudster can use this loophole to disguise attacks, or even to redirect legitimate purchases. Making modifications needs to be an easy process for customers, but you can’t ignore best practices.
All order modifications should be screened and evaluated for fraud. Most companies neglect this process since the order itself has already been screened. Rescreening, however, is an important step in preventing post-transactional fraud.
Blacklists & Whitelists
Wouldn't it be great if you could create lists of buyers who are—and who aren’t—allowed to do business with you? Well, you can.
A “blacklist” allows you to block traffic from specific users, and from any user with a certain trait. For example, you can block all traffic from specific countries or regions known for high volumes of online fraud.
Conversely, a “whitelist” will block all traffic except for those outlined in the parameters of the list. If you are only able to do business in the US, you can exclude all non-US IP addresses from making a purchase.
Transaction velocity is another important fraud indicator. Fraudsters understand that time is not on their side; they want to steal as much as possible in a short amount of time, before their activity is discovered. One way to do that, for instance, is to make multiple purchases of goods with high resale value in quick succession.
Fraud detection tools focused on velocity checking will monitor the data involved in each transaction. The tool watches for repeated purchases from the same user and flags them as suspicious. If you receive a sudden uptick in purchases from one cardholder, or shipping to the same address, you should take it as a probable sign of fraud.
Machine learning is important as a backbone for your fraud prevention tools. With machine learning, real-time insights are fed into models based on common fraud red flags. These transactions can be rejected outright or set aside for manual review.
The more data you have, the more accurate that data will be, and the better your technologies can be at detecting fraud warning signs. That means that over time, your systems will be able to detect fraud faster, and with greater accuracy.
Did you know you can take advantage of biometric technology, even in the eCommerce space? It’s possible with mobile payments platforms like Apple Pay and Google Pay.
These payments apps employ two-factor authentication. The user needs to use a passcode/thumbprint to unlock the device, then provide another positive ID to authorize a purchase. Plus, transactions made over mobile payments are tokenized, just like an EMV chip purchase, for added data security.
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Where Fraud Prevention Tools Fall Short
Not all fraud originates from the same threat source. So, applying a “one-size-fits-all” strategy is destined to fail.
Adopting multiple different fraud tools is the only way to fight back effectively. Of course, even with multiple different fraud detection and fraud prevention tools at your service…there’s still no guarantee that you’re protected. You’ll still run up against two key limitations:
- A tool is only as effective as it’s set up to be: Having multiple tools to fight fraud won’t be enough. You need a coordinated, carefully planned strategy to make the most of the tools at your disposal.
- Not all fraud is criminal in nature: Criminal fraud tools have no impact on threats like friendly fraud, family fraud, or affiliate fraud. You’ll need additional help to deal with these threats.
Here at Chargebacks911®, we specialize in preventing the kind of post-transactional fraud that criminal fraud tools like those listed above can’t reach. We work alongside other technologies to provide comprehensive, multilayered fraud defense.
Whether your chargebacks are the product of identity theft, underhanded affiliates, or simple miscommunication…the solution is here. Get the right fraud prevention tools—and the best tactics to use them—with Chargebacks911. Click below and get started today.