How to prevent online fraud?
Payment gateway » Blog » SecurionPay Academy » How to prevent online payment fraud?

How to prevent online payment fraud?

SecurionPay Academy

Do you know what fraud is and why it sends chills down the merchant’s spine when they just think of it? Read on to learn several types of online payment fraud and how to prevent it.

Video transcription

It costs merchants, their clients, consumers and the global economy hundreds of billions of dollars per year. That’s right, fraud.

In today’s video, we’re gonna be talking about how to prevent online payment fraud.

So, what is fraud?

Online fraud is wrongful or criminal deception intended for personal or financial gain. This is done online with payments over the Internet. The first thing that we want to do is talk about the types of fraud.

Types of fraud

The first one is credit card fraud.

This is the most common type of fraud. It’s basically when a fraudster steals credit card details and buys goods online. Then the original customer, the real customer, can then issue chargebacks to get their money back. In this case, the merchant can not only lose the customer, but they could also lose a lot of time and money, and their chargeback ratio goes up.

The second type is a denial of receiving a product.

This is when the thief or the fraudster orders a product and denies that they ever received it. It’s difficult for the merchant to rebuttal this, however not impossible

The third type is fake returns.

That’s when the thief or the fraudster receives a product and they try to convince the merchant that they didn’t receive or they partially received the contents of their product. They send it back saying that they want a refund, that they didn’t get what they asked for or what they paid for.

The fourth type is triangulation fraud.

As a merchant, you probably hear about this often. This is when a bunch of fraudsters open up a fake website where they offer the products and/or services at a lot cheaper price. Customers go on this website, they put in their card details, they put in their addresses, and then the fraudsters use that for fraudulent activities.

These are just four examples of fraud. There are lots and lots of different types.

What we want to talk about now are tips on how to prevent fraud.

How to prevent fraud

1. First things first is to monitor.

Monitor the shipping address, the IP addresses, whether the numbers are right. In general, if you have any doubts, contact the customer directly or your payment gateway.

2. Second, focus.

Focus on the order and when it’s happening. Is it happening early in the morning or late at night? Are there express shipments being ordered in large bulk quantities? Focus on that.

3. Third, be conscious.

Be conscious of false positives or false declines. These fall into the buckets of identity, structural or technical issues. When there’s issues with the card (with the card being outdated), with shipping information being wrong, etc. This costs merchants and the industry tens of billions of dollars per year.

4. Last but not least, artificial intelligence or machine learning.

Be conscious of false positives or false declines. These fall into the buckets of identity, structural or technical issues. When there’s issues with the card (with the card being outdated), with shipping information being wrong, etc. This costs merchants and the industry tens of billions of dollars per year.

Thank you so much for watching today. If you have any questions, comments about the video, please reach out to us, as we’d love to talk to you. We’d love to show you how to build on what we described and what we have going on with it. Stay tuned for more and enjoy the rest of your day!

The following two tabs change content below.
Patrick Kozakiewicz

Patrick Kozakiewicz

Chief Evangelist
Chief evangelist whose motivation is to make history. My philosophy is to convert people and link my goals into changing the world. I have experience and curiosity in technology, mindfulness and making business flourish.

Events and webhooks: Everything you need to know

Changes in Visa Chargeback Regulations Explained