Credit cards are low-hanging fruit for hackers, fraudsters and criminals. Enterprises that accept electronic payments are always at risk for being targets of credit card fraud. How bad is the problem? Global card fraud in 2015 alone resulted in $21.84 billion in losses. Card issuers and merchants incurred 72 percent and 28 percent of the losses that were experienced. Of course, cardholders had to deal with the aftermath of having their payment information and identities compromised. In addition to assuming financial responsibility for money lost from fraud, financial institutions and merchants are often legally responsible for taking actions to correct the situation.

  Why Enterprises Need to Tackle Credit Card Fraud Fraud isn’t going away. In fact, it’s getting worse. Total monetary losses from fraud jumped by almost $1 billion between 2015 and 2016. A large portion of the money that was lost was lost through credit card fraud. Credit card fraud and security breaches both have a direct impact on the public’s willingness to trust an enterprise.

  Steps for Fighting Credit Card Fraud Any step that makes it difficult for a hacker to complete a transaction could deter fraud. Hackers typically look for loopholes and oversights to exploit. Of course, enterprises should have measures in place that can detect and prevent both in-person fraudulent transactions and remote transactions. The majority of fraudulent credit card transactions take place online or over the phone. This means that the only red flags that enterprises have to work with are factors like the geographical location of the cardholders, suspicious charge amounts and inconsistent shipping requests. Here are some basic ways that companies strengthen credit card fraud prevention in 2017 and beyond:

  • Require the full name, 16-digit card number, expiration date, CVV, phone number and billing address of any cardholder
  • Make use of the Address Verification Service (AVS)
  • Require validation via photo ID or some other method when payments are made
  • Contact cardholders or financial institutions directly when an issue arises with a payment method
  • Set up a system for validation for large transactions
  • Have a system in place to scrutinize transactions with separate billing addresses and shipping addresses
  • Flag international payments for further inspection

Some of these protocols will need to be carried out by humans rather than automation. The best method is to build a system that uses red flags or triggers to bring in human attention. For instance, any suspicious transaction can be put on hold and isolated until the situation can be investigated and verified.

  Where Big Data Comes into the Picture How can enterprises be sure that activity that is suspicious is detected? This is where big data comes in. Payment fraud detection can be built into a system based on a mix of enterprise-specific rules and overall trends. Any type of order or payment that falls outside of the standard can be flagged for further investigation before it goes through. A platform that uses big data is capable of acting according to baselines and rules that have been established around proven patterns.


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Donn Schlosser