As quickly as organizations find ways to close security vulnerabilities and shield data from digital interlopers, criminals come up with new tactics to circumvent them. 

Because you can never take the safety of your systems and the information you store and transmit for granted, it’s vital to understand the latest anti-fraud techniques, and the role they play in protecting businesses like yours.

Common types of fraud

Digital criminals can attack businesses in numerous ways. They might gain access to someone else’s credit card, using its details to make unauthorized purchases. 

Alternatively, a legitimate customer might engage in friendly or chargeback fraud, making false claims against the merchant and requesting a refund from their bank. 

In a triangulation fraud scheme, stolen payment information is used to fulfill orders that have been placed on a bogus storefront. Sophisticated criminals can even use automated scripts to make fraudulent purchases.

As you can see, digital crime takes numerous forms and can hit hard against the defenses of all types of businesses, regardless of their size or the kinds of products they sell. 

Fortunately, there are several effective tools that can be implemented to reduce ecommerce fraud in its many iterations.

Real-time monitoring tools

One of the most compelling benefits that today’s technology provides is the ability to continuously analyze payment transactions as they occur. 

By constantly scanning vital data points such as location, IP address, transaction amount, and frequency, they can detect anomalies and suspicious patterns. 

Before the payment is allowed to go through and damage can be done, the system is able to flag the transaction for investigation by you or one of your staff members.

Identity verification tools

Particularly when you have no face-to-face interaction with shoppers, it can be difficult to ensure that buyers truly are who they claim to be. The good news is that technology is helping to remove much of the ambiguity from ecommerce payment transactions.

This happens through the use of tools that verify the identity of customers at all stages of their shopping journey, including account creation, login, and checkout. 

Frequently used anti-fraud measures include multi-factor authentication. It requires customers to furnish a PIN or other additional piece of information to confirm identity, biometric authentication from facial ID or fingerprints, and document verification. 

These precautions have proven effective in preventing fraudsters from taking over customer accounts to gain access to sensitive data and make unauthorized purchases.

Anomaly detection tools

The point of sale system from your secure payment processor is capable of storing large amounts of information about your customers, and the purchases they make. 

At the same time, larger technologies that are used to update its security features regularly sweep the internet, analyzing vast amounts of data to glean details about overarching buying patterns and trends. 

When your POS identifies anomalies that call established trends into question, merchants can investigate the possibility that fraud may have occurred.

Geolocation and device fingerprinting

When someone buys a product or service online, the device that they used to make the purchase can be identified by its own unique address, and hardware and software configurations. 

Geolocation specifies the geographical location of the user who made the purchase. If the merchant’s anti-fraud tools detect any inconsistencies between the user’s current device or location and their past behaviors, the transaction can be flagged for further investigation. 

This can be particularly helpful in reducing instances of cross-border fraud.

Fraud scoring

Sets of rules and risk indicators are built into anti-fraud tools. These are used to evaluate a purchase as it is happening, assigning a risk score. 

A higher score is more likely to suggest fraud and warrants further investigation, manual processing, or rejection. 

On the other hand, a low categorization can be processed without delay.

3-D Secure

When merchants and their customers are not physically in the same room, the risk of fraud through identity theft is much higher. 

A protocol known as 3-D Secure helps to minimize the added risks that come with these card-not-present transactions. It does so by requiring the user to provide an additional layer of authentication before the payment is allowed to go through. 

Once the shopper authenticates their purchase with the card issuer, generally by giving a one-time password that has been texted to their phone, the funds can be transferred without a hitch. 

As a result, the shopper’s identity is confirmed, minimizing the added card-not-present risk for the merchant.

AVS and CVV validation

With just two simple steps, AVS and CVV verification tools can spot instances of fraud and root them out. 

The AVS, or Address Verification Service, checks to be sure that the billing address provided by the customer matches the one on file with the card issuer. 

CVV validation verifies the three or four-digit security code on the back of the credit card, increasing the likelihood that the shopper has physical possession. 

Although not foolproof, these measures provide extra safeguards that can foil the attempts of bad actors that might otherwise have resulted in serious financial harm.

Identity theft and other types of cyber crime pose significant threats in today’s digital landscape. However, instituting a broad spectrum of anti-fraud tools can drastically reduce the likelihood that your business will become the next victim. 

If you are interested in strengthening your company’s security precautions, get in touch with your secure payment processor today to get started.