Fraudsters Take the Path of Least Resistance

February 14, 2018

Each year, there is a word or phrase that seems to pop up everywhere. This past year, many were talking about resistance. Naturally, we had to extend that to fraud! If there is one thing we know about fraudsters, it is that they do not like resistance. Unlike merchants, fraudsters do not have to conform to any rules and are able to adapt their methods rapidly to new technologies. With the objective of maximizing the value stolen while minimizing effort spent, it is only logical that fraudsters are deterred by a multi-layered fraud protection strategy. 

Here are some of fraudsters’ top tactics, along with ways that merchants can resist them:

Fraudsters Are Going Mobile 

Fraudsters follow the money, and mobile payments are no exception. According to BI Intelligence, in-store mobile payments will reach $503 billion by 2020. That’s a lot of money, and fraudsters are increasingly turning to mobile channels for fraudulent activity. According to Kount’s 2017 Mobile Payments and Fraud Report, merchants still have a long way to go in order to minimize fraud risk, with 28% of merchants still not able to identify whether a mobile transaction came from abroad.

To fight against this, merchants should resist the urge to deploy the same technology and practices that have been used in the past, but rather research comprehensive fraud platforms that are constantly updated with the latest fraud techniques to protect their business without any negative impact to the customer experience.

Old Faithful—Card-Not Present Transactions Remain a Threat

According to Juniper Research, the most prescient fraud battle is arguably card-not-present (CNP) fraud, where retailers stand to lose $71 billion globally over the next five years from fraudulent CNP transactions.

Merchants should resist CNP fraud by implementing enterprise-level fraud protection that is developed specifically for online payment service providers. Developed specifically to protect against CNP fraud, Kount Central protects payment processors, payment gateways, acquiring banks, ecommerce platforms, hosted pay (shopping cart) pages, and the merchants they serve from the devastating effects of fraud.

Buying Their Way to a Pay Day

Since the creation of the so-called “Dark Web”, fraudsters have been on it. But did you know just how easy it is for a criminal to get his or her virtual hands on a stolen credit card?

According to Coin Telegraph, stolen credit cards are one of fraudsters’ cheapest tools, writing: “The surprisingly low price of payment cards is indicative of the ease with which such items can be sourced. It is not just physical theft; large-scale data breaches are the major culprits for credentials of millions of customers being wholesale transferred into malicious hands.”

While hacked accounts and emails are a bit more expensive, a stolen Visa or MasterCard on the Dark Web sells for just around $15. This represents just how accessible and cheap user data has become.

While consumers shoulder some of the responsibility—and have some work of their own to do in safeguarding their passwords and various accounts—it is the merchants who have access to best-in-class anti-fraud technologies that are expected to guard against fraudulent transactions. For the consumer, data breaches are often not disclosed or detected immediately by companies which leave the consumer vulnerable sometimes years after the initial breach.

The most successful merchants understand, and are addressing, CNP fraud with a proactive and multi-tiered strategy. Merchants should utilize artificial intelligence and a combination of data, strategically gathered context information from best-in-class providers, machine learning, and skilled professionals to access and make use of insights that can guide informed decisions to protect against fraud.