For nearly 20 years, we’ve provided solutions for e-commerce businesses to accept credit cards online. We can imagine what many of them, if not all of them, are saying these days about the prevalence of online fraud, and how it has worsened with every passing year.
‘I didn’t sign up for this when I launched my business!’
No merchant did or does. Unfortunately, however, merchants are having to become invested fraud experts. We’ve long blogged that mitigating e-commerce fraud is a continuous game of whack-a-mole for a business owner. Fraudsters will always adapt – as soon as one method of attack is shut down, a new method follows. Merchants must continue to be vigilant and routinely examine their transactions and their defense infrastructure.
There is no end in sight for online fraud, and here are a few things we expect to see in 2018.
Account takeover (ATO)
There is one element that every single data breach has in common: Someone did something they were not supposed to do.
As long as employees of companies do things they are not authorized to do, there will be data breaches. As long as there are data breaches, there will be instances of account takeover (ATO), when a miscreant gets a hold of a consumer’s bank account, credit card or any business account credentials.
One critical point about ATO is that the window of time before it is discovered, enabling the fraudster to run amok, perhaps taking a shopping spree or emptying the consumer account of all funds. Though there is no silver bullet to stop ATO, our advice for merchants is to invest in either machine learning and artificial intelligence (AI) schemes which identify and flag inconsistencies in real-time, thus empowering merchants to deny transactions before they happen. Not only are machine learning and AI solutions proactive in halting fraud before it happens, most if not all providers of such allow for custom settings, so as to mitigate false positives.
Credit card fraud: More of the same
Because of the ease of purchasing stolen credit card numbers off the dark web for cheap, this is a dubious practice that will continue to plague consumers, even though a fraudster has a short window to capitalize. This is not news.
Give the credit card associations their due, however: Identifying patterns and inconsistencies with consumer credit card accounts before fraudsters can capitalize continues to improve, but it remains a battle.
There are sophisticated fraud networks on six continents, including industrial levels in Eastern Europe and Asia. In many countries, credit card fraud is a major industry similar to any other legitimate industry – with offices, employees on payroll and water coolers. Fraudster wannabes can view videos and purchase guides on using stolen credit card information. Consumers and merchants have no recourse but to be vigilant and defend themselves and their businesses.
Transaction laundering
Speaking of whack-a-mole…
As a payment processor, we’ve had a front row seat to transaction laundering. Fortunately, we are steadfast in our underwriting policies, which has empowered both our merchant account managers and underwriters in identifying the signs that a merchant is selling more than he is advertising on his website. Some signs include:
- Suspiciously expensive items (that might be purchased anywhere for far less expensive).
- The merchant is overly aggressive to find a fast credit card processing solution.
- Merchants with a history of high chargeback rates and online complaints.
- Website errors: poor-quality website, perhaps put together in a rush with broken links, stock photos with watermarks, or photos missing altogether.
- The merchant may be hesitant in offering certain details about his business, such as payment processing history, MATCH list penalty, high chargebacks rates or online complaints.
Transaction laundering doesn’t always mean the suspect merchant is selling something illegal or illicit. We find shady merchants who disguise their businesses simply to get lower processing rates to accept credit cards online.
Accept credit cards online with Instabill
Instabill has partnerships with domestic and international acquiring banking partners which offer solutions to high risk merchants and businesses to accept credit cards online. Upon approval, merchants will connect to the secure payment gateway of the acquiring banking partner with which we match your business.
With a 10-minute conversation, our merchant account experts can gauge which banking partner is best for your business. Have a conversation today at 1-800-530-2444.
