Types of Fraud To Prepare For This Year

Online fraud is expected to flourish as the US rollouts EMV technology. The transition has made physical credit cards nearly impossible to counterfeit and fraudsters are now turning their attention to online sales. Some reports even indicate online retail fraud in the US alone to rise by 106 percent over the next three years.

For US retailers, the coming wave of online fraud means it is vital to stay up-to-date with how fraudsters are operating. Knowing their tricks can help protect an online business and prevent hard-earned revenue losses.

Card-Not-Present Fraud: Typically, these fraudsters use stolen credit card numbers to make fraudulent purchases. Usually, a business finds out about this when the actual cardholder initiates a chargeback about the unauthorized charge with their issuing bank. To help prevent this, verify the CVV code and billing address with the sale. It will help confirm that the cardholder is actually the person authorizing the sale. An address verification system (AVS) can also confirm if the address provided matches the billing address on file with the credit card issuing bank.

Friendly Fraud: Unfortunately, out of all the different types of credit card fraud, this may be the most difficult to prepare for. With friendly fraud, a legitimate buyer will use a credit card to purchase goods or services. This fraudster seems like a normal customer, but after they obtain goods or when services are rendered, they still initiate a chargeback. The best protection for friendly fraud is to keep accurate records so you are prepared to dispute a chargeback if one should occur.

Gift Card Fraud/Coupon Abuse: Currently, gift card fraud is one of the more popular types of fraud. These fraudsters use stolen credit cards to purchase gift cards in bulk to be used or resold long after the purchase is made. An online business can employ an anti-fraud solution to help avoid this. Also, offering coupons or promotional credits could be opening a business up to promo code abuse. To avoid losing money on this it is important to identify fake and linked accounts.

Even though card-present credit card fraud will likely decrease with the EMV rollout, more criminals will naturally turn to buying online with stolen credit card numbers. Unfortunately, fraud doesn’t go away, it just goes somewhere else. Fraudsters are always looking for new vulnerabilities, but knowing how fraud is operating online is a simple way to prevent it.

BMT Micro is here to help as well. We are continually adding new features and functionality to make sure that online security measures remain a priority. Our advanced, proprietary fraud detection system is state of the art and effective in preventing almost all fraudulent order attempts. If you have questions or concerns about your current fraud prevention or if you are interested in learning more about BMT Micro’s offerings please contact our vendor services at vendors@bmtmicro.com.