While the world is experiencing a pandemic, credit card fraud has seen a dramatic increase over the past three months. There doesn’t appear to be a clear reason for the increase but it seems like a good time for us to share information on how you can protect your business. Almost every business in America has experienced a dramatic loss of sales as a result of the coronavirus. Additional losses caused by fraud can have an even greater effect on your profit.
Here are some tips on detecting credit card fraud:
Mobile Device Fraud
An important fact to note is that more than half of all payment fraud last year was committed using a mobile device. This means that fraudsters are committing more fraud by visiting e-commerce sites and making purchases with stolen payment information or using the login credentials of someone who has stored their payment information on your site. In this latest trend, hackers are trying to steal user names and passwords rather than credit card numbers. While storing credit card numbers on a website can make it convenient for customers to quickly place orders, it also makes them and by extension, the merchant vulnerable. Fraudsters who manage to break into a PayPal or Venmo account using the true owner’s login information can quickly drain those accounts by transferring all the money to someone else or making fraudulent purchases.
eCommerce Businesses Targeted
The increase in fraud has clearly been focused on eCommerce platforms as there has been a drastic jump in the recent past. The recent quarantines have caused an increase in the use of online shopping platforms and that increased usage makes it easier for fraudsters to also use these platforms for stealing. To place this fraud increase into perspective, fraudulent transactions on eCommerce platforms increased 73% in 2019 from the prior year and that number is expected to be even higher for 2020. In particular, on-demand services such as food delivery services like Grub Hub and rideshare platforms such as Uber and Lyft have been hit the hardest. On-demand services sustain an immediate loss because the service or product has been delivered long before the theft is discovered.
Any business that uses eCommerce to transact sales should be vigilant in watching their daily sales for abnormal transactions such as multiple purchases in the same day by the same customer, delivery address changes, or unusually large transactions.
Average Transaction Amounts
We all know about what our average sale is for our business. Fraudsters tend to go for the gold and create transactions that are generally higher than what you might expect. As they say, “go big or go home” and thieves want to maximize their loot. Be especially vigilant in sales involving big-ticket items that have a high resale value. Thieves make their money by reselling stolen goods. The average fraudulent transaction amount is about three times higher than an average transaction amount.
While a fraudulent credit card transaction is a hassle for both the cardholder and the merchant, the cardholder is likely protected from an actual loss while the merchant does not have that same protection and will likely end up eating the loss. To add insult to injury, you will likely pay a chargeback fee on top of the loss you have already sustained. This is what makes it so important for business owners to be on their toes and watching for abnormal transactions.
By being informed about current fraud trends and knowing what signals to look for in potential fraud you can protect your business. Always use the Address Verification Service to confirm the cardholder’s billing address and never be afraid to pick-up the phone and call your customer to make sure it is really them placing an online order when in doubt.