Transaction fraud has become a growing concern, posing serious risks to businesses. It threatens financial security and erodes customer trust. As more businesses transition online, some individuals exploit system vulnerabilities, leading to significant challenges.
This makes it crucial for every business to adopt robust measures to detect and prevent transaction fraud. Effective fraud detection safeguards financial integrity while reinforcing customer confidence. This article will discuss transaction fraud and the importance of detecting it.
Verify the Email Address
A customer’s email address is often linked to their payment details in their bank’s records. To verify if a transaction is genuine, you can include the customer’s email address in the payment request sent to your payment service provider. This helps identify suspicious transactions and enhances acceptance rates by cross-referencing the email with the one on file at the bank.
Studies show that 40% of merchants shield their customers’ email addresses from third parties to prevent fraud during sales. Implementing this approach could reduce the risk of personal data being misused for transaction fraud.
Uncommon Device Types
Transactions coming from unexpected device types or operating systems that don’t align with those typically used by your customer base could signal potential fraud. Monitoring these inconsistencies plays a crucial role in preventing fraudulent activities.
Unusual patterns in device usage, like a spike in transactions from a previously unrecognized device type, might point to emulators or organized fraud groups leveraging stolen data. Improving device fingerprinting methods can help detect and block these fraudulent transactions effectively. MRZ verification scanning can help verify a customer’s driver’s license and passport in seconds, making it challenging for identity thieves to commit fraud.
Verify Location Matches the Destination
Legitimate transactions typically feature consistent billing, shipping, and IP address locations. Evaluate if the customer is likely to request delivery to the specified shipping address based on their usual activity and billing location.
Transactions with significant discrepancies between the IP address and shipping or billing address might warrant additional scrutiny or verification. Be aware that fraudsters might try to disguise their location using an IP proxy. However, proxy piercing software can reveal the user’s actual location.
Conduct Velocity Checks
Velocity refers to how often requests are made using a specific payment card or customer account. Automated scams may attempt to exploit stolen credit card numbers by processing hundreds of transactions within seconds, an act that no person could reasonably perform. This makes velocity checks a reliable method for detecting suspicious activity. Payment service providers (PSPs) can examine transactions involving the same card across their entire network, identifying patterns that indicate either fraudulent or legitimate behavior.
Sudden Spikes in Login Attempts
A sudden increase in site traffic or repeated login attempts, particularly from unfamiliar users, might indicate potential fraudulent activity. These patterns can often be measured using a risk score to evaluate their level of threat.
Such anomalies may point to automated wire transfer attacks designed to breach passwords or validate stolen credit card details. By adopting strong verification measures and keeping a close watch on login behavior, you can effectively manage these risks and address them before they become more serious.
Endnote
To combat online transaction fraud, businesses must adopt innovative approaches and leverage advanced technology. Failing to do so could harm their operations. By staying informed about the latest tactics used by fraudsters and implementing robust security measures, businesses can enhance the safety of online transactions and foster trust.
