Credit Card Payment Processing: Fraud Report Notes Patterns, Red Flags

Credit Card Payment Processing: Fraud Report Notes Patterns, Red Flags

There is a degree of empathy when we provide an e-commerce merchant the credit card payment processing solution they need, and that empathy comes from the staggering amount of fraud from which e-commerce merchants need to defend their businesses (and themselves). We also feel for our longtime merchant partners, because fraud prevention and identifying the bad actors was not what they had in mind when they launched their online businesses.

Considering the current climate, they have no choice. Which is why we subscribe to many daily, weekly and monthly newsletters from our colleagues who specialize in helping merchants detect and mitigate credit card fraud and share the latest trends publicly.

Recently, we received Feedzai’s Q1 2018 Fraud Trends Report, a thorough, fascinating (and fast) update on the activities of online criminals. Lately, criminals are sticking to various predictable routines of online crime, but that one form is surging: account takeover (ATO).

We’re hereby deeming the report required reading.

Don’t forget about the hints of stolen credit card information

It’s spring here in New England, when most of us are spreading fertilizer and yard treatments that prevent weeds and dandelions. Every spring, they keep coming back unless preventative measures are taken.

With credit card payment processing, merchants should take the same approach, what with the use of stolen credit cards and the sale of such on rogue websites, a tactic that remains as popular as ever. Thankfully, artificial intelligence and machine learning are keeping pace, which, if merchants are having this issue, they should consider. The use of stolen credit cards feeds directly into Feedzai’s next finding.

Short windows of opportunity

Fraudsters continue to strike in small spurts and short windows, and remain very active in those windows – which is one of the first signs a merchant should look for. The life of a stolen credit card is very short – no more than an hour or two if criminals are lucky – because the credit card issuers have become very savvy in noticing irregularities and notifying the cardholders.

All it takes is one

Fraudsters look to find any vulnerability or weakness, exploit it, then try it on every business they can thereafter. One of the features some fraud protection businesses offer is penetration testing, in which small businesses can patch and improve areas that are vulnerable to sophisticated hackers. This tactic usually signals small bursts of activity on a merchant’s website and/or checkout page – another red flag.

Information sharing is encouraged

Many industries show the same patterns in fraud attempts, such as fast food restaurants, fuel stations and retail, likely because they are ever so popular (and necessary) with consumers. An online criminal targets such businesses as potential gold mines in the event they can break through, thus merchants are encouraged to share their stories and compare solutions.

There remains a clear difference in spending amounts

When a criminal with stolen credit card information strikes, and has a short window as mentioned prior, the dollar amount is always high – noticeably higher than the average legitimate sale in the majority of incidences – simply because they’re on the clock. In the current credit card payment processing climate, fraud alerts from the credit card issuers are faster than ever.

The credit card types popular among criminals

Corporate, purchasing and private label (store-branded) credit cards are the most attractive credit card types for criminals, simply because each type usually contains a very generous spending limit. When performing due diligence and manual reviews on attempted online purchases, transactions by such cards warrant a second look.

Remember, however, consumer credit cards remain just as popular among criminals.

Give us your feedback

We’re always curious about merchant experiences with credit card processing fraud and encourage feedback about strategies and success stories (non-success stories too). Please share your experience below.

If you are seeking a new credit card payment processing solution, our merchant account experts would love to speak with you. We are reachable at 1-800-530-2444 Monday through Friday from 8 a.m. until 6 p.m. U.S. eastern time.

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