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3 Things to Consider When Thinking About Your Fraud Prevention Strategy

At Subuno, we spend decent amount of time working with merchants, helping them configure and set up their fraud prevention strategy. Here are 3 things to consider when you are looking to step up your fraud prevention strategy or have fraud/chargeback issues.

Fraud is a multi-dimentional issue that needs a multi-layered approach

Fraud is an ever changing game and no one particular solution or tool will cover all your needs all the time. In this blog, we’ve highlighted various tools, such as social networks, ip geolocation, and how they can be used. As technology grows, undoubtedly more tools will become available. Fraud trends reflect the technology advances as well as technology limitations. Your fraud prevention strategy needs to be dynamic as well.

Just as you don’t use a sand wedge to putt or that Big Bertha for the last 30 yards, certain fraud prevention tools are good for certain types of situations. Only if you have a bag of tools at your disposal do you have the ability to be versatile with your game and cover all basis. Having a multi-layered capability, will also provide longer term protection as fraud shifts.
Question to ask yourself: Do you have the right tools to implement a comprehensive strategy?

Manual review is a cost not a benefit

As a merchant, needless to say, you are constantly thinking about the overall financial health of your operation. Every line item in your financial report that’s not an income is necessarily a cost. Are you keeping a keen eye on the third party tools and services you are paying, but not paying attention to how you or your agents can improve your manual review of orders more efficiently or accurately? At the end of the day, time is money; a cost is a cost. You should look at the cost as a whole and determine how best to minimize the overall cost, not just the individual parts because all the pieces fit together. Sure, sometimes human intuition hits it right on the money, but there are a lot of tools out there that can filter, dissect and perform repetitive tasks a human can do, better and faster. Or even help humans be able to make better decisions much faster. There will always be a need to perform manual review, the goal should to use technologies as much as possible to narrow down the number of orders to be reviewed and to make the review process more efficient.

Question to ask yourself: What’s your time worth? How much is it really costing you when you view time in dollar terms?

Don’t be a low hanging fruit

We, as people, have all experienced, at one time or another, choosing a path of least resistance. Hey, why no? Why make life unnecessarily complicated and difficult for ourselves. Fraudsters are people too. Why would they choose a complicated, unproven fraud scheme, when a list of stolen credit cards with matching cvv numbers are just a few clicks and few dollars away?

The general rule of thumb is that fraudsters look for the least amount of efforts with maximum return. For example, as mentioned in last week’s post on EMV, in person fraud declined sharply after the implementation of EMV in the UK, but card not present fraud in the corresponding period skyrocketed. The reason was simple, EMV made card cloning much harder to accomplish, so fraud migrated online.

So what does that mean to you as merchants? It means that you should make sure that you are not the low hanging fruit that’s easily defrauded. Don’t be the path of least resistance. Sometime simple solutions can still make a serious impact though so you don’t always need to look at the shiniest and most complex solutions on the market. Having the basic checks, such as AVS, CVV, basic ip geolocation can give you not only the basic protection, but free you from being an easy target.
Question to ask yourself: Are you a low hanging fruit?

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