The good thing is that while fraudsters keep coming up with new schemes to steal from unsuspecting customers, you can have the upper hand by incorporating some proven tactics.
How to keep fraudsters at bay
Fraud comes in many forms. Some fraudsters use stolen cards to buy high-ticket items that they resell for profits. Others use bots to take advantage of new account rewards and get enough points to securefree items, while some steal your customers' financial data by intercepting their payments. With so many angles to consider, a single approach is not enough to protect your business.
- Employ machine learning and artificial intelligence
Identifying fraud cases isn’t straightforward. You need to be on the lookout for changing email addresses, differences in purchasing patterns, customer location variations, and mismatched addresses. How can you do this effectively across several orders? If you’re like most merchants, you’d likely focus on fraudulent chargebacks. Unfortunately, these otherwise harmless changes account for most fraudulent activities, including interception and account takeover fraud.
While you might not be able to keep track of customer data and buying patterns, AI can, and you can use this to your advantage. Such software can highlight abnormal changes and block purchases that are out of the norm, enabling you to follow up with customers before accepting payments.
Some of the best fraud detection systems include:
Fraud scoring: This approach assesses each transaction based on legitimacy and considers customer details such as transaction history, IP address, and delivery details. If the system determines there’s a high likelihood of fraud, it declines the transaction.
Blacklisting: This system puts customers in 2 lists. One has those who have been deemed as legitimate buyers, and the other has those determined to be fraudsters. It only allows legitimate buyers to purchase items.
Velocity checks: Since fraudsters often use bots to buy items fast, this system helps you nab them by gauging the speed and volume of transactions based on normal customer patterns.
Address verification: Customers who input billing addresses that don’t match those recorded by the issuing bank have their transactions declined.
Two-factor authentication: This method requires customers to enter passwords sent to their registered phone numbers or email addresses before their card issuer accepts the transaction. Biometric checks are now also becoming increasingly common.
- Join a merchant network
Merchants often share new fraudulent schemes as they occur, enabling you to keep up to date as new tricks emerge. Instead of tackling fraud alone, take advantage of these databases and use the insights to equip your fraud detection software with the latest information. You’ll not only help yourself but also other merchants, creating an ecosystem that will collectively curtail the rise of fraudsters.
- Secure your website
Fraudsters target all businesses but pay more attention to those with obvious security loopholes. At the minimum, you must comply with the PCI DSS regulations before accepting card payments on your site. Also, invest in tools that scan the site for malware and protect you from brute attacks.
Securing the source
Your payment processor should also play a key role in helping you mitigate fraud risk. And what better option than payabl.? With our payment gateway, which integrates advanced AI and machine learning detection, you can easily keep track of all one-click and recurring payments while focusing on what matters most - your sales! Contact us today, and let’s help you find the best secure payment solution for your business.