How SMEs arm themselves against online retail fraud
It's easy nowadays: You click a few times - and you've ordered something on the Internet. Since fraud is on the rise, online merchants are urged to be cautious.
The statistics speak for themselves: according to the Cybercrime Report for the 4th quarter of 2016, online stores recorded a 57 percent increase in rejected payment transactions. Gabriel Garay, Expert Data Analyst Fraud at Intrum Justitia, is not surprised by this high figure: "Buying from online stores is very popular. They are often the target of fraud attempts because they offer insecure payment methods such as invoice."
Three types of fraud in focus
The most common type of fraud is inbound fraud: a person knowingly orders products, but knows beforehand that they cannot pay for them. Identity theft also plagues the online industry. Here, the fraudster assumes the identity of another person and orders the selected products in their name. He has found the details on social media or on the Internet in general, for example. In order not to attract attention, he chooses a neutral address or post office as a pick-up station. The third type of fraud is denying receipt of delivery. This is all the more serious because the online retailer bears the shipping risk.
Four fraud services for prevention
What is the best way for companies to combat these fraudsters? To defend against Fraudcases, there is a multi-stage process.
- Automated verification of order requests. "Our customers include the majority of the leading high-risk stores in Switzerland. To protect them, we rely on blacklists and cross-shop checks," Gabriel Garay knows. Specifically, these records include personal and household details, street, house number and postal code, plus technical information such as device ID and email address. There is also a fraud pattern that can be used to determine identity falsification (for example, from Meier to Meyer) and to detect identity theft or multiple orders.
- Reactive manual check after the order has been placed. It serves as a supplement to the automated check. Among other things, it includes an open search for fraud patterns. Gabriel Garay: "We work with various distributors to recall goods before delivery if necessary. We report suspicious cases directly to our customers. In addition, we cooperate with law enforcement agencies."
- Fraud Analysis. Intrum Justitia continuously expands the blacklists and fraud patterns. In addition, the collection company creates fraud reporting: it evaluates customer-specific risks to adjust audit parameters and analyzes order requests and payment behavior, which guarantees effective risk management.
- Fraud Check. "By means of a fraud check, we examine the susceptibility of online stores to fraud - free of charge," explains Gabriel Garay. "If the store operators implement the recommended measures, they receive a fraud control certificate. We are sure that this will deter any fraudsters."
Secure protection against fraud thanks to innovative software
The software provider "ThreatMetrix" has also recently launched a comprehensive solution for fraud protection in online commerce - especially against identity abuse. "It has already received several awards for its innovations. We take care of the implementation of the interface," says Gabriel Garay. This guarantees verification in real time:
- Orders are processed quickly and automatically.
- No registrations or secure codes are required, so the customer's buying experience is not diminished.
Further, the device identification technology detects hidden proxies (communication interfaces in a network) and detects fake browser identifiers, the actual operating system, satellite, dial-up and mobile connections as well as VPN. Furthermore, Intrum Justitia has access to the global software customer network with information from approximately 55 million logins and transactions per day. "In this way, we protect our customers from foreign order gangs and the company's websites from unmasked users," Gabriel Garay emphasizes.
Briefly interviewed: Gabriel Garay
Gabriel Garay, online retail fraud attempts are increasing as sales volumes grow. How important is effective fraud prevention to Intrum?
Gabriel Garay: It has top priority. After all, Intrum assumes the default risk in the e-commerce sector for several hundred million francs.
Can you show concrete results?
Yes. Every year, we use automatic checks in the high-risk segment to prevent fraudulent orders worth 37 million Swiss francs. We block orders worth more than 400,000 Swiss francs per year by means of manual checks.
Contact for more information:
Intrum Justitia AG, sales.ch@intrum.ch, +41 44 806 85 57
