Sharing ideas for better fraud prevention.

5 Fraud Trends of 2015 (webinar recap)

A few weeks ago, we hosted a webinar and revealed the top fraud trends that our team has encountered this past year. I posted a recording for the webinar in a post. Many of you have since requested a recap in words since your time is limited.

Here is a recap of the top fraud trends. While the webinar was for Yahoo (Now(?) Luminate) merchants, merchants on other platforms definitely should take note as many the tips are applicable to e-commerce merchants in general.

Trend 1: AVS & CVV no longer good indicators

This is certainly not a new trend. For a few years now, we are seeing more sophisticated fraud attacks that mimic real, legitimate orders. I know these are old tried-and-true fraud prevention methods that many merchants use, merchants need to realize that fraudsters can easily bypass these checks these days. To drive home the point, let me share some stats with you:

Good Ordesr
  • AVS: 91% YYY
  • AVS: 2% NNN
  • AVS: 7% mixed
Bad Orders
  • AVS: 97.5% YYY
  • AVS: 1% NNN
  • AVS: 1.5% mixed


These were numbers we collected after analyzing millions of transactions.

Take away: AVS alone is not good enough. See my detailed posting on why.

Trend 1: Card testing is still a problem

For some reason, we saw much more card testing targeting Yahoo merchants than other platforms we work with. We are also seeing more sophisticated card testing. Even these fraudulent orders are beginning to look like real orders. Gone (most) were the days that these orders were easy to spot because they came from Venezuela and Nigeria, and blocking all IP from those countries are a sufficient strategy. We also are seeing full AVS and CVV match.

One tale-tell sign of card testing is the frequency. Many of these attacks are also done by bots too. These can certainly be detected by using some kind of velocity filter.

Take away: See Trend 1 above and beware that orders that are coming from “legitimate” places may also be card testing. Make sure to use velocity as an indicator.

Trend 3: Package interception & redirection

This is sometimes referred to as “reshipping fraud”. Package interception occurs when the fraudster places orders using
the cardholder’s billing address as both the bill to and ship to addresses. As a result, from the merchants’ perspective, the orders would look low risk. Once the order is shipped, the fraudster then intercepts the goods by waiting for the carrier to show up, or retrieves the package when left on the front porch. Package redirection is similar. The major difference is that the fraudster calls up the shipper to change the destination once the package has left the fulfillment facility. Whether interception or redirection, this scheme effectively bypasses any fraud checks you may have in place.

As a merchant, especially if you sell high end items, make sure that signature delivery is required. You may also want to direct your shipper to not allow address change unless the request comes directly from you.

Take away: Make sure you look at the larger picture. Just because an order passes muster initially, doesn’t mean that it won’t turn into a chargeback. Make sure you know what your shipper’s policy is and ask for strict control.

Trend 4: “Drop shipping” with your store

This technique is also known as triangulation. It involves you, fraudster and a customer. The scheme works like this: fraudster posts online (often using marketplaces) something that YOU sell. Once he receives an order from the customer, he then orders the item from you using a stolen credit card, but then shipping it to the customer who places the order.

Often, this type of fraud is somewhat harder to spot, as AVS usually checks out, reverse address on both billing and shipping addresses also often check out. What you need to look for is that missing link between buyer and recipient. Try to verify and gain access to the biller’s phone. Give him a call, often, he has no idea what his credit card just bought.

Take away: Always make sure you can establish a link between the buyer and the recipient when the bill to and ship to addresses don’t match up.

Trend 5: Phone orders

We’ve been seen a rise of phone orders in 2015, both made on landlines and mobile phone. In terms of total loss and number of incidents, it’s still a small portion of all the fraudulent transactions we see, but it’ll be interesting to see how this trend develops in 2016. Phone order is attractive to fraudsters because it’s low tech and can evade basic IP address detection that gives away their whereabouts. Also, merchants are probably not as vigilant as they’ve been in the past.

Take away: Stay vigilant, whether it’s an online order or a phone order.

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