When most people think of fraud, they think of credit card fraud, security breaches, and online theft of digital data. While there are strong reasons for this increased attention to CNP-related fraud, merchants and customers should not forget the threat of debit card fraud.
Many people have a story about a friend who swiped their debit card at a local store and was then later contacted by their bank, alerting them that their debit card had been compromised. Meanwhile, the compromised debit card is still safe in the owner’s wallet, knowing that they have never given out their PIN. Just as easily as credit card fraud happens, so, too, does debit card fraud.
Unfortunately, there is a complacency that so many merchants and customers default to about debit card fraud, which allows fraudsters to continue to steal PIN numbers and copy debit cards.
Merchants and customers must not overlook the threat of debit card fraud. Preventing debit card fraud is possible with adherence to recommendations from banks and customer awareness of the problem.
Merchant Protection from Debit Card Fraud
While customers are the primary victims of debit card fraud, the merchant pays an equally heavy price for this fraud. Remember the friend who had their debit card compromised at a local store? This friend will never return to that store, and, guaranteed, this friend has told everyone he/she knows about the debit card fraud at the local store. Now the merchant has a potentially damaged customer base and is struggling to rebuild brand reputation and customer loyalty.
Compounding these problems are the new issues the merchant has with their issuer over PIN pad security and overall trust. In other words, merchants cannot overlook the real threat of debit card fraud. Keep in mind these fraud prevention measures during debit card purchases and PIN pad security.

  • The customer must insert, swipe, or tap their own debit card.
  • Keep the PIN pad visible on the counter. Do not take the customer’s debit card and insert it into the machine.
  • Treat the PIN pad like cash. Keep it secure and out-of-sight when not in use.
  • Regularly inspect the PIN pad, making sure it hasn’t been tampered with or replaced with a decoy.
  • Stay up to date with any recommendations from the PIN pad issuer and bank regarding debit card security.
  • Contact law enforcement and the bank upon any unusual behavior or changes in the PIN pad.
  • Know your employees and be aware for any unusual behavior.

Merchants are expected to comply with all security recommendations from the PIN pad provider and issuing bank. Failure to comply with these recommendations can result in further problems, should the merchant be a victim of debit card fraud.
Protecting Customers from Debit Card Fraud
Most customers aren’t thinking about debit card fraud risks when they use their debit card to pay for a purchase. However, it’s a good idea for merchants to remind customers of how they can protect themselves from fraud risk.

  • Make sure there is ample space for customers to use their debit card securely.
  • Don’t hesitate to ask other customers to step back from the paying customer.
  • Never swipe, insert, or tap the customer’s debit card for them.
  • Do not enter the customer’s PIN for them.
  • Always give the customer the receipt for the debit card purchase.

The majority of customers appreciate the extra measures to protect them from debit card fraud. These don’t need to be obvious, rather just simple tactics that protect both the customer and the merchant from fraud risk.
Preventing Debit Card Fraud
Just as staying up to date with the latest fraud detection and prevention technology is critical for CNP merchants, it’s equally critical for card-present merchants.
Merchants should use chip-activated terminals to protect themselves and their customers. Most debit cards are chip-activated, allowing customers to tap or hover their debit card or smartwatch to pay for purchases. The tokenization technology in the chip and the terminal encrypt the transaction, providing instant authorization and verification.
Merchants are responsible for updating and maintaining their PIN terminal. If there are problems with the terminal or multiple customers have reported problems with using their debit card, contact the PIN terminal provider.
Learning More About Debit Card Fraud Prevention
The onus is on merchants to protect themselves and their customers from debit card fraud. Merchants who have both m-commerce and brick-and-mortar sales models must be extra vigilant in the face of debit card and credit card fraud. Refer to the following resources to learn more about debit card fraud and best-business fraud prevention approaches.

  • Prevent Debit Card Fraud
  • Get Ahead of Evolving Fraud & Security Concerns in the Post EMV World
  • Secured Data, Reduced Fraud
  • Fraud Prevention & Security Technology

You can always contact us to learn how to best protect your business from fraud.


Merchants need customers. This is a simple fact of business. The challenge for merchants is in attracting and then keeping these customers. Building customer loyalty and convincing these customers to trust the brand are key in customer retention.
This hoped-for longevity often hinges on the first contact the customer has with the merchant. This often occurs when the customer contacts the customer service team with a problem or question. Now the pressure is on the customer service team to find a solution and keeping the customer satisfied. Any missteps during this first interaction can result in a lost sale, chargebacks, friendly fraud, negative social media reviews, and a lost customer.
For most merchants, the value of the customer service team cannot be overlooked. These employees are on the front lines of customer interaction, often dealing with unhappy and even angry people. This is not an easy job nor should its value as a service be overlooked. Solving customer problems, responding to questions, and going above and beyond can be the difference between keeping a loyal customer and losing a customer forever.
But what does this have to do with chargebacks and chargeback protection? To put it simply, the more accessible and well-intended a customer service team presents themselves to customers to provide good service and help resolve problems, the more likely a chargeback can be prevented.
Don’t Overlook Customer Service
To provide good customer service and prevent chargebacks, merchants need to be accessible. Customers are looking for the easiest way to get a resolution to their problem, and, too often, the easy route is to contact their card-issuing bank. When merchants are the key player in communication and able to deal directly with the customer, the problem can be solved and the chargeback can be avoided.
The problem, however, is that most merchants lack the solutions in place to support direct customer-merchant interaction. Along with the implementation of a payment solution, such as CDRN which supports real-time communication with the customer, merchants need to focus on instructing and directing their customer service team to provide helpful resolution strategies.
All it takes to keep a customer happy is a positive interaction with a customer service team member. To ensure and maintain appropriate standards, merchants must work with their customer service team members to reinforce best business practices to build customer loyalty and satisfaction.

  • Be available. An unhappy customer might not have the patience to search for the customer service email address or phone number. Make it easy for the customer to reach out and get help. Include a customer service email link, phone number, or feature a live chat option on every web page and during the payment and checkout process.
  • Be flexible. There are always exceptions to the rule, so consider empowering your customer service team the to make decisions that do not rigidly conform to posted refund and return policies.
  • Be loyal. Cater to your the long-term and VIP customers – especially during the busy holiday sales period. Clear review of your customer’s purchase history can help the customer service team member make a decision on how best to solve the problem.
  • Be proactive. Respond to customer queries quickly and efficiently. Remember, the customer is unhappy and the longer the customer has to wait for a response, the more likely he is to give up and file a chargeback.

While the customer might not always be right, the merchant must keep the customer happy and loyal.
Clear Lines of Communication
Your customers chose you and now you need to work hard to cultivate their loyalty. Don’t assume that because you have a fancy website or mobile app, or because you have the best product, that you’ll be able to keep your customers.
Maintaining customer loyalty comes down to clear and straightforward communication. Interact with your customers to respond to their problems and questions. Be available and make it easy for them to work with you.
Remember that you are not the only choice for the customer, so it’s important that you stand out from the crowd. You can do this with an outstanding customer service team and with the support that a dispute resolution solution such as CDRN provides.
Now is the time to review your customer service practices and to review how you interact with your customers. Don’t wait for the crush of the holiday shopping season to make changes to your customer service policies and payment solutions. Contact us today and our experts can advise on how to put the solutions in place that can prevent chargebacks and keep your customers loyal.


We are awash in data. Never before have people so willingly shared personal information, private details, and key identifying data so willingly. This, of course, is due to how the Internet has evolved to be a space for business and social connection.
Merchants and consumers are the primary beneficiaries of this evolution to an e-commerce network. Merchants who previously sold their goods in brick-and-mortar retail spaces, or relied on the fading world of catalog sales, now have quick and easy access to a global customer base. This global customer base is keen to browse and shop from previously inaccessible merchants.
The snag to this model of “always open for business” is that of security. Merchants are reluctant to talk about e-commerce security for fear over the questions and concerns it can stir up in their consumers. Consumers know that online transactions may involve risk, but darn it, they want that pair of shiny red shoes by tomorrow morning so they’ll risk sharing their banking information online!
These attitudes should not absolve merchants from spending as much time on e-commerce security as they do on their social media marketing. Instead, the prevailing attitudes of complacency should force merchants to act: know the e-commerce threats, know how to prevent them, and know what to do should a breach occur.
Real E-Commerce Threats
Merchants are on the frontlines of e-commerce security – it is up to merchants to know what the threats are and how to defend against them.

  • Cross-site scripting. A JavaScript snippet is embedded in a vulnerable web page and used to access cookie data, impersonate website visitors, and steal private data such as credit card information.
  • SQL injections. An SQL injection can be used to create fake administrator accounts that allow access to secure data.
  • Phishing. Valid customers are tricked by fake emails into updating their account information or changing their password; this data is then stolen and used by fraudsters.
  • Distributed Denial of Service. A DDoS attack strategically overburdens the website’s servers with requests, causing the website to crash. The websites are attacked and then held for ransom by the hackers.
  • Bad bots. These bots infiltrate websites and commit a range of malicious attacks: price scraping, login fraud, fake shopping carts, and site analytic manipulation. In its 2017 Bad Bot Report, Distil Networks revealed that 97% of websites are attacked by a bad bot and that these bots represent on average 15.6% of the website traffic.
  • Man-in-the-middle attacks. Can occur when an insecure WiFi network is used or the website data is not encrypted. Fraudsters can listen in on consumer movements and collect personal data.
  • Malware. Often inserted into the merchant website as a result of phishing or an SQL injection. This malware is used to control the merchant’s website, giving the fraudster complete control and access to the site and data.

Knowing how e-commerce security is threatened gives merchants the power to prevent such attacks. The more merchants know about e-commerce strengths and vulnerabilities, the better.
Real E-Commerce Security
Merchants cannot use the wait-and-see or trial-and-error approach to their e-commerce security. There is little room for error and there is even less chance of recovery from such error. Merchants must be proactive in the face of e-commerce security threats and take preventive action.

  • Multi-layered security. Learn which technologies make sense for your business and how to strategically apply them. Read Fraud Protection Lessons from Goldilocks to learn the advantages of not just relying on an off-the-shelf solution.
  • Be data savvy. Do not store customer data. Regardless of how secure you believe your database may be, stored customer data is a key target for fraudsters. Keep only the information you need to track purchases, refunds, and to use in chargeback representment cases. Use a proven payment gateway that relies on tokenization and complies with PCI standards.
  • Enforce strong passwords. Customers must be instructed to enter a password that uses a combination of uppercase and lowercase alphanumeric characters. Educate your customers on why a strong password is a must.
  • Educate customer service staff. Ensure customer service team members know the facts on e-commerce threats and security. Make sure they understand phishing and know not to provide private customer details over the phone, email, or in chat.
  • Site analytics. Prepare to notice unexpected website traffic by knowing who is visiting your website, how they’re accessing the site, the pages they frequently visit, and other site interactions.
  • Always be up-to-date. Be vigilant about applying software patches and perform recommended software updates.

Along with knowing how e-commerce threats happen and how to prevent them, merchants must also have a plan in place in the event a security breach occurs. This disaster recovery plan should include details such as how customers will be contacted, the media plan, site back-up details, and key contact information for the IT team managing the e-commerce website.
Real E-Commerce Expertise
While all this information may seem overwhelming, we understand that you simply want to sell your products online and minimize your concern about e-commerce threats and complicated security measures. The good news is that Verifi has a proven team of e-commerce security experts who can help you.
Please contact us to find out how you can best protect your business and website from malicious hacks and threats. We will work with you to devise and implement a customized e-commerce solution that keeps your business and customers protected.

Choosing an e-commerce solution doesn’t have be complicated. However, it is easy to get bogged down in feature lists, requirements, and product promises. We want you to have the best information you need to make an informed decision about choosing an e-commerce solution.
Aim for implementing an intelligent e-commerce solution that provides end-to-end payment protection and management solutions. There’s a wide variety of e-commerce fraud prevention technologies available to you. Seeking expert guidance or additional resources on choosing the right one can help you make an informed decision on setting up the ideal e-commerce solution for your business.
Facts on E-Commerce Fraud
E-commerce fraud is a real threat that is not going anywhere. In a recent analysis of their 2016 customer data, Experian identified that Florida, Delaware, Oregon, and New York ranked as the riskiest states for e-commerce fraud. Additionally, this study revealed that cities ranked highest for fraud risk are located close to large ports or airports – making it easier for criminals to reship stolen merchandise.
Compounding this is the risk of data breaches and the ease with which criminals can access customer data. The 2016 Consumer Sentinel Network Data Book, released by the Federal Trade Commission, highlights that of consumers surveyed, 32% reported being victims of data theft. More startling is that for the same time period in 2017, 56% of consumers have been victims of identity theft and ensuing credit card fraud.
This speaks to the need for merchants to protect themselves and their customers with an e-commerce solution that has the intelligence capabilities to detect fraud and theft, analyze customer habits, provide purchase authentication and authorization, and prevent chargebacks.
E-Commerce Solutions for Fraud Prevention
There is no such thing as an off-the-shelf e-commerce solution. Merchants must use a customized e-commerce solution that fits with their business needs, customer types, and payment options.
One of the best approaches is to implement a multi-layered approach that uses the best-in-class fraud prevention technologies. While it is tempting to rely only one piece of fraud detection technology, fraudsters are quick to identify the technology and then overpower it.
With a multi-layered approach, merchants can use the right technology at the right time. When researching e-commerce solutions, look for the following fraud detection technologies:

  • Geolocation. Verify the location of the customer with the actual location of the active card.
  • Biometric analysis. Compare the customer’s fingerprint with that of the cardholder.
  • Address verification service. The issuer compares the address(es) provided during the transaction.
  • CVV. Additional credit card security code required during the final payment authorization.
  • IP intelligence. Deep analysis of the IP address used for the transaction to monitor possible risks associated with this location.
  • Device intelligence. Deep packet inspection and proxy piercing capabilities to expose specific identifying details of the connected device submitting the transaction.
  • 3 Domain Secure. A cardholder authentication protocol for e-commerce transactions and CNP purchases.
  • Merchant co-op. New orders are compared against millions of orders taken by other merchants.
  • SSL. Secure encrypted communication protocols between devices and payment solutions.

An e-commerce solution should do more than allow merchants to accept payments – it must have the power to detect and prevent fraud. Ultimately, merchants are responsible for protecting customer data from the threat of data breaches and hacks.
Learning More About E-Commerce Solutions
Learning about e-commerce solutions shouldn’t be intimidating or overwhelming. We provide expert insight on fraud, chargebacks, payments, and e-commerce solutions. As your trusted partner in payments and e-commerce, we’ve put together a short list of resources that can help you make an informed decision.


There is no denying that e-commerce fraud is a real and present threat. While this fraud risk is not slowing CNP sales, it is forcing many merchants to become overly stringent in how they detect and prevent fraud.
The unfortunate trickle-down effect of these strict fraud detection rules is an increase in false declines. It’s critical that merchants have solutions in place to prevent false declines and to implement a method of revenue recovery in the event of such errors.
Unfortunately, many merchants are oblivious to these false declines, and as a result do not understand the need to be proactive with changing how they detect and prevent fraud. Having a rules engine that detects fraud is important; however, these traditionally overly strict rules engines contributed to an estimated $8.6 billion in lost sales in 2016 due to false declines.
Because merchants are so focused on preventing fraud and chargebacks, they lose sight of the lost revenue that results from these high false decline numbers. To get ahead and stay ahead, savvy merchants should learn how to prevent false declines to maintain a consistent and valuable revenue stream.
False Declines Are Costly
Unfortunately, the reality of false declines is overshadowed by the cost and danger of fraud. There is no denying that fraud costs merchants; however, it’s important to keep in perspective how fraud compares to the cost of false declines. The same technology that contributed to an estimated $8.6 billion in false declines prevented an estimated $6.5 billion in fraud loss. In other words, the cost of false declines is approximately $2 billion more than that of fraud.
The cost of false declines is not a one-off; it is the cumulative impact of these false declines that can really hurt merchants.

  • Lost revenue. Both initial lost revenue and future losses, due to rejected customers not returning for subsequent purchases.
  • Long-term customer loss. Once incorrectly rejected, customers may not return for future purchases. There can be an extended impact with negative customer reviews and social media exposure.
  • Marketing costs. The cost to market to and connect with customers is high, this expense is lost when target customers are rejected due to invalid assumptions.

Typically, a false decline is triggered when the rules engine of the merchant’s payment solution identifies anomalies in customer behavior or sees a mismatch in identifying data. While this customer monitoring is key in detecting fraud, it’s important to understand that these rules engines cannot rationalize the reasons for the anomaly.
This speaks to the need for merchants to use a multi-layered approach to fraud detection that involves both technological and human interaction. Your customer service team is critical in detecting fraud and preventing false declines.
Customer Service to Prevent False Declines
Along with using a proven third-party solution to mitigate false declines, merchants can do a lot with their customer service team to prevent false declines. While merchants might balk at the perceived cost of using customer service team members to prevent false declines, this proactive communication goes a long way in saving lost sales and in building customer relationships.
Many of these common reasons for false declines can be alleviated with a proactive customer service team:

  • Unusually high order. Typically, unusually high-price orders are automatically rejected by rules engines. Instead, merchants should flag these orders and contact the customer to confirm it. There could be a valid reason for the large order; with a quick email exchange or phone call, the merchant can keep the sale and the revenue.
  • Expired credit card. Payment solutions are programmed to react to invalid credit card information, causing a false decline. Instead, when an expired credit card number is detected, trigger an email to the customer alerting them to the problem. Often, customers are not aware that they’re using an expired card.
  • Address mismatch. Orders are rejected when the provided address does not match that on file. Contact the customer to find out if they have moved, made an entry error (common with mobile devices), or may be an unknown victim of identity theft.

These examples highlight why it’s important for merchants to look beyond the obvious and take a closer look at what the data is showing them. While a strict rules engine is key in detecting fraud, it cannot interpret address mismatches or unusually high orders or an unexpected customer order. These examples can be indicators of friendly fraud – emphasizing why merchants must do more than the standard accepted practices to protect their revenue stream.
Review Proven Technologies
Just as there is not one ideal solution for detecting and preventing fraud, the same holds true for limiting your losses to false declines. It takes a customized approach with intelligent technology and a skilled customer service team to prevent the hidden cost of false declines from hurting your business.
Contact us to learn more about how our Decline Salvage solution can provide you the support you need to realize revenue recovery and prevent the trickle-down effects of false declines.
 
 
 
 


Chargebacks are not the enemy. Yes, chargebacks can cost merchants is loss of sales, drain on resources, and when excessive they can lead to problems with the issuing and acquiring banks. However, chargebacks really do work as a method of protection for both customers and merchants.
Evolved out of the Fair Credit Billing Act in 1974, chargebacks have become established as a form of protection for customers against fraudulent use of their credit cards. Because cardholders were skeptical and nervous about the inherent security of credit cards, a no-fault mechanism was created to provide credit card confidence.
The overarching purpose of the chargebacks process is to protect cardholders from fraud. However, savvy fraudsters have come to depend on the chargeback system as a means to steal from merchants. In addition, honest cardholders use the chargeback process to affect a refund on products or services, rather than contacting the merchant directly. And most often, customers don’t realize the impact that chargebacks have on the merchant.
It’s important for merchants to remember that merchant chargeback rights do exist.
Overlooked Merchant Chargeback Rights 
Unfortunately, the chargeback process is often framed in a cardholder versus the merchant scenario. This sets everyone up for tension and frustration. Most discussion and writing about chargeback reason codes, the representment process, and overall chargeback system is positioned as anti-merchant and pro-cardholder.
This is neither fair nor realistic, and it’s important for merchants to understand that they are not alone in the chargeback process. Merchants need to understand some key rules and conditions surrounding chargebacks, which inherently provide them with protection.

  • No cash-back transactions. Chargebacks cannot be filed as a cash-back remedy for a disputed transaction.
  • Late delivery. If the product arrives after the stated delivery date, the customer cannot immediately file a chargeback. The customer must first attempt to return the item to the merchant.
  • 15-day waiting period. When a customer returns an item, the issuer must wait 15 days before processing the chargeback. This 15-day waiting period gives the merchant time to process a refund and communicate with the customer.
  • Reason codes. Some reason codes clearly detail that the cardholder must make efforts to solve the problem with the merchant. In addition, the timelines in the reason codes have been established to give the merchant time to gather evidence for representment.
  • Purchase price only. The chargeback refund cannot include the costs of shipping, handling, or other surcharges.

Many merchants have a misunderstanding that issuers always agree with the cardholder. While this is easy to assume, since the cardholder is also the customer of the issuer, remember that the issuer also wants to keep the merchant as a customer.
The major credit card companies have systems in place to review purchases, customer history, and chargeback claims. For example, when Visa discovers an invalid chargeback, this claim is returned to the cardholder without the merchant or acquirer ever being notified. As well, most acquirers have systems in place to review and remove invalid chargebacks, without ever alerting the merchant.
Visa, MasterCard, American Express, and Discover have very clear merchant compliance rules and regulations. Not only do these rules protect the credit card brand, but they also give merchants protection in the event of a chargeback. The rules around refund and return policies, for example, are designed to protect merchants from unwarranted returns. Merchants should be familiar with the documentation provided to them by credit card companies and ensure they’re fully protected against chargebacks.
The Importance of Chargeback Representment
The right of chargeback representment is among the most important right that merchants possess. The right of representment allows merchants to dispute fraudulent chargebacks and prevent chargeback fraud.
There is a misconception that the chargeback representment process is designed to defeat the merchant. Often, this belief goes unquestioned because so many merchants do not understand the representment process, or they have been stung by a difficult representment experience.
When a merchant is prepared with the requisite evidence, a well-written dispute letter, and complies to the representment stipulations as outlined in the reason code, these efforts serve to assert a very promising opportunity for the merchant to win the dispute.
Yes, to win a chargeback representment case, the merchant must be prepared. However, this preparation should not be a barrier to disputing fraudulent chargebacks. The chargeback representment process is the best way for merchants to highlight fraudulent chargebacks—convincing acquirers and issuers of the problems in the system and to prove to criminals that merchants cannot be bullied by theft.
You do have rights. You can and must exercise your right of chargeback representment. Contact us to learn how we can help you with your chargeback representment case. Stand up and use the chargeback process to detect and prevent fraud, and, above all, protect your business.


Paying for groceries with a hover of the wrist over a point of sales terminal. Ordering and paying for coffee on a mobile app. These methods of paying are quickly becoming the standard.
Just as digital streaming hastened the demise of video rental stores, the same is happening to the overstuffed wallet packed with credit, debit, and store cards. Replaced by their digital cousins, consumers now have the ultimate convenience in buying and payments. And merchants have the added benefit of an always-on and ready-for-business sales model.
Of course, with this convenience economy comes the heightened risks of payment fraud. As merchants know, every new payment method brings with it inherent risks. The good news with mobile payments is that the very technology that makes it possible for customers to tap, swipe, or hover also provides a layer of security.
The key, however, is in not depending on this as the sole source of mobile payment fraud protection. Just as merchants want to grow their revenue, so do criminals. Hence, the constant drive for fraud detection improvements and the need for everyone involved in payments to commit to real action.
Mobile Payments Are Here to Stay
It’s not just groceries and coffee that have cracked the mobile payments scene. Now consumers expect to pay for everything digitally: when choosing a product or service, consumers want to pay for it with ease and convenience.
An entire infrastructure of businesses has been born out of this ubiquitous mobile payment environment. From online banking to budgeting apps that track mobile payments and to digital loyalty programs and mobile-only sales, mobile payments have become big business.
Recent research from The Statistics Portal, tracking the global mobile payment revenue, highlights this trend: $450 billion in sales in 2015 is projected to exceed $1 trillion in 2019.
Merchants across all industries are desperate to harness this sales and revenue potential. Mobile payments technology has these three advantages for merchants:

  • Larger customer base. With mobile POS and m-commerce options, merchants are able to sell to a wider, more diverse customer base. Providing customers multiple payment options reduces barriers to sales.
  • Happier customers. Customers want convenience. Giving customers control over how they pay for their purchases enhances their buying satisfaction.
  • Cost savings. The convenience of mobile payments allows merchants to reduce their infrastructure needs, in regard to the lower cost of operating an m-commerce store versus that of a brick-and-mortar store.

Merchants must appreciate that these advantages come in a very tight marketplace. Consumers expect seamless, fast, secure, and easy-to-use m-commerce and mobile POS experiences. The moment there is a problem with the app, entering a password, or a delay in authorization, the customer could be lost to a competitor.
Managing Mobile Payments Fraud Challenges
With any new change in payment methods, there is a risk for payment fraud. Mobile payments, even with intelligent technology allowing for instant authentication and authorization, are not immune to fraud risk.
By identifying key fraud challenges, merchants can implement the solutions and technology that uniquely work for them. Relying on an off-the-shelf approach to mobile payment fraud detection and prevention may not be the right approach.

  • Minimal transaction history. Not having a customer transaction history can make it challenging to track abnormal purchasing behavior. Using device authentication and fingerprinting technology can help verify the customer identity.
  • User error. Smartphones have small keyboards, making it easy for customers to incorrectly enter passwords or credit card data. Take advantage of technologies that allow secure data storage paired with geolocation security to enhance customer identification.
  • Slow mobile site loading. Some mobile sites and apps are slow to load, due to the fraud detection technologies being used. Consider using a multi-factor authentication to work around this latency.

Merchants cannot be expected to become experts in identifying mobile payment fraud risk and then determining the right fraud prevention solutions. For this, we urge you to rely on the experts at Verifi.
We specialize in payments solutions that work for you to detect and prevent fraud. Our Global Payment Gateway provides robust and customizable options for merchants who want comprehensive payment fraud protection. Contact us to learn how our “Super Gateway” can protect you from payment fraud, while simultaneously allowing you to take advantage of the booming mobile payments environment.


Online sales, telephone sales, and mail-order sales all present opportunities for fraudsters to commit Card Not Present (CNP) fraud. It’s important for merchants to recognize that this prevalent form of fraud is not confined to online sales. Any transaction during which the customer with their payment card is not present is at risk for CNP fraud.
Whereas merchants are focused on the risks of fraud and theft to their online sales model, it’s important that equal vigilance is paid to telephone and mail-based orders. The same technologies used to validate, authenticate, and verify credit card details during an online sale must also be applied to these earlier established forms of sales.
Real CNP Fraud in Action
To stop CNP fraud, merchants must know how it happens. Understand that you are the first line of defense against CNP fraud. Don’t presume that because CNP fraud hasn’t happened to you yet that it won’t happen. This general negligence in the payment space enables fraudsters to continue with their criminal behaviors.

  • Stolen credit card details. Criminals acquire stolen credit card information to make fraudulent online purchases. Often the criminal does not have all of the credit card details, such as the CVV number or full address.
  • Card testing. Fraudsters make small purchases with stolen credit card details to test this data. When the data works, the criminal follows this up with large purchases from the same merchant. These sales are not flagged because the cardholder is now known to the merchant.
  • Diverted delivery. Fraudsters have the delivery sent to an address that is not connected to the credit card. Because the address verification service (AVS) does not review the entire address, the address mismatch can be missed.
  • Online skimming. Criminals prey on security flaws in online payment solutions and hack customer data. Often complete customer details including passwords, phone numbers, and order history are stolen – enabling the criminal to mimic the customer.
  • Fraudulent gift cards. Using stolen credit card details, criminals buy gift cards and then use these gift cards to make purchases or sell these gift cards to other criminals.

The 2016 LexisNexis True Cost of Fraud Study highlighted that U.S. merchants experienced an 8% increase from 2015 in the dollar cost of fraud loss. This means that for every dollar lost due to fraud, merchants are actually losing  $2.40 to chargebacks, fees, and reinvestment for replacement of lost products or services.
Merchants are hit with loss of inventory, chargeback fees, increased issuer and acquirer fees, cost of product delivery, labor-related costs to fulfilling the order, and loss of revenue. Not to be overlooked in this true cost of fraud is the damage to brand reputation and how this fraud impacts merchant standing with credit card issuers.
Detecting CNP Fraud in Action
In its March 2017, Card-Not-Present Fraud Around the World study, the US Payments Forum collected data on how merchants use technology to detect and prevent CNP fraud. As part of their study, the US Payments Forum included data collected by the 2015 Merchant Risk Council Global Fraud Survey.
Highlighted in the US Payments Forum study is that according to the Merchant Risk Council survey, most merchants rely on the credit card CVV and blacklists, or negative lists, to authenticate purchases. Additionally, surveyed merchants plan to incorporate 3D Secure, device fingerprinting, and email address verification to their authentication methods.
This speaks to the need for merchants to look beyond one type of fraud detection and focus on implementing a true multi-layered approach. As emphasized earlier, criminals use a number of methods to commit CNP fraud, relying on various flaws and technology gaps to allow them to succeed. For example, while CVV is an effective way to prevent purchases by stolen credit card details, it is not the most effective method for stopping diverted delivery or card testing.
Card Not Present merchants—including merchants who sell via telephone and mail—must use the latest in fraud detection technology. The key is in using the right technology at the right time in the right way. This correct application of fraud detection technology requires proven fraud detection solutions and first-hand experience.
We urge you to review these fraud detection technologies:

  • Geolocation. Verify the location of the customer with the actual location of the active card.
  • Biometric analysis. Compare the customer’s fingerprint with that of the cardholder.
  • Address verification service. The issuer compares the addresses provided during the transaction.
  • CVV. Additional credit card security code required during the final payment authorization.
  • IP Intelligence. Deep analysis of the IP address used for the transaction to monitor possible risks associated with this location.
  • Device intelligence. Deep packet inspection and proxy piercing capabilities to expose specific identifying details of the connected device submitting the transaction.
  • 3 Domain Secure. A cardholder authentication protocol for e-commerce transactions and CNP purchases.
  • Merchant co-op. New orders are compared against millions of orders taken by other merchants.
  • SSL. Secure encrypted communication protocols between devices and payment solutions.

Just as you rely on more than one marketing approach to promote your business, it’s necessary to layer fraud detection approach to protect your business. Stand up to Card Not Present fraud and know that with expert advice and proven technologies, you can ensure you’re not losing out to CNP fraud.


Every click, like, share, search, and comment can be tracked, stored, and processed to deliver a customized online experience for consumers. Using behavioral analytics, CNP merchants can deliver a dynamic, personalized browsing and shopping experience. The impersonal digital shopping experience quickly gets very personal by mimicking an in-store sales relationship.
Now we’re seeing this data analysis move from the level of the online store to a deeper level for fraud detection systems. Just as digital data allows companies to predict consumer wants and needs, it also allows for sophisticated machine learning fraud detection.
The same data that is used to track and predict customer shopping preferences can allow CNP merchants to detect fraudulent transactions before they happen. Moving at the same speed of the data processing that displays the red shoes instead of the blue shoes, machine learning algorithms keep tabs on the shopper identity, their mailing address, and credit card details.
Algorithms Matter in Fraud Detection
Machine learning is not new. It stems from the 1950’s, rising to prominence in the 1980’s with key algorithm developments. However, it is now coming to the forefront in the consumer online experience, thanks to big data. These algorithms have changed how fraud detection can work to better protect CNP merchants.
Built on algorithms, these are some of the common machine learning methods:

  • Random Forest. Excellent predictive abilities. Supports a range of data types. Requires special labeled data. The most popular algorithm used in fraud detection.
  • Deep Learning. Does not need special labeled data. Strong predictive abilities. Takes longer to train. Cannot handle a range of data types.
  • Support Vector Machines. Excellent predictive abilities. Can identify complicated patterns. Cannot handle a range of data types. Needs labeled data. Not scalable.
  • Neural Networks. Good predictive abilities. Can manage complicated patterns. Not scalable. Needs labeled data.
  • K-Nearest Neighbors. Responsive to anomalies and missing data. Good predictive abilities. Not good at interpretation. Needs labeled data.

While the Random Forest and Deep Learning algorithms are more robust than the other options, this does not mean they provide a flawless fraud detection solution. It all comes down to the data available, how this data will be used, and the end goals of the data analysis.
Similar to using a multi-layered fraud detection approach to analyze and respond to data, the same holds true with machine learning. The key is in using the right algorithm for the right scenario.
Is Machine Learning the Right Choice?
This is not a simple question to answer. When reviewing fraud detection solutions, it’s important to understand what machine learning can and cannot do. Is it the best and only option? Probably not. But should it be ignored because it’s still not perfect? No.
Machine learning for fraud detection cannot:

  • Think on its own. The algorithm and fraud detection capabilities depend on the quality of the data.
  • Learn quickly. It takes time for the algorithms to learn the data and how to interpret it correctly. Merchants must also have access to large volumes of data to build effective patterns.
  • Interpret anomalies. A person can notice a change in buying patterns around the holidays and approve these transactions. Algorithms don’t do this: they see the anomaly and flag the transaction, just as they’ve been designed to behave.

Machine learning for fraud detection can:

  • Respond quickly. Consumers want fast and immediate transaction processing. Machine learning enables this with its real-time learning and analysis. Approval or decline happens in milliseconds.
  • Be efficient. Whereas human error occurs during repetitive tasks, machine learning remains consistent in repetition and is superior at detecting patterns and anomalies.
  • Scale. Traditional rules engines cannot support continually growing datasets and new data inputs. Algorithms such as Random Forest and Deep Learning are quick to train and thrive on large volumes of data.

Machine Learning Is the Future of Fraud Detection
Fraud has become a sophisticated science. The only way to beat it is with sophisticated machine learning models and solutions.
We do know that machine learning is extremely efficient at preventing false positives and reducing the amount of time spent on manual transaction reviews. We also know that CNP merchants cannot simply rely on machine learning to detect and prevent fraud.
It still takes a multi-layered approach of using the best-in-class technologies and algorithms tailored to the data and the scenario to create the ideal fraud detection solution.
Verifi is your trusted resource for fraud detection and prevention solutions. Please contact us to learn more about machine learning and how we envision this technology shaping payments and fraud detection solutions.


Account takeover fraud is typically thought of as a threat to cardholders. However, merchants are equally at risk to loss and damage to their business due to this prevalent form of payment fraud.
The very nature of account takeover fraud results in more loss for the merchant than it does for the cardholder. Whereas the cardholder is able to absolve liability for the fraudulent use of their credit card, merchants are left without recourse to recover lost revenue as a result of account takeover.
Account takeover fraud is not limited to just credit or bank cards—email accounts, online shopping carts, mobile wallets, and even payment gateways can be impacted.
Account takeover is a threat to the payments industry at large. It’s not something that happens only in fiction or to other people: account takeover fraud is real and on the rise with the growth of CNP sales.
Account Takeover Fraud Hurts Merchants at All Angles
A data breach occurs and users of a well-known email service or customers of a large social media company are impacted. Their data is stolen—including passwords, email addresses, phone numbers, home address, and other secure identifiers.
This information can then be sold on the dark web to criminals who use advanced technology to access credit card accounts and online shopping accounts, to apply for new credit cards and more. Criminals then to use this stolen information to make purchases, complete cash advances, and do worse.
Typically, the cardholder is infomred of this fraud when they learn about a maxed-out credit card or see unknown charges on their credit card statement. This can take months, depending on the level of vigilance of the cardholder.
For the consumer, this fraud can have long-term impacts, with no knowledge of who has access to their personal information. Fortunately, most credit card companies do not hold violated cardholders responsible for the charges.
The merchant, however, is not so lucky. The losses for the merchant go beyond the cost of the lost merchandise and associated revenue. Merchants now have to deal with the trickle-down effects of this payment fraud:

  • Monetary fraud loss. This payment fraud is outright theft. As a result, there is no recourse with a chargeback representment case or other established measures to allow the merchant to recoup losses.
  • Cardholder distrust. While the fraud isn’t the merchant’s fault, the cardholder may not understand this. He knows his credit card was used fraudulently at “XYZ Merchant” and no longer trusts sending business their way.
  • Brand damage. While the security breach was not initially exacted upon a particular merchant, it’s not easy for this merchant to gain distance from its stigma. This can result in great damage to brand and reputation.

Merchants are dependent on cardholder confidence and trust. Account takeover fraud can slowly but surely chip away at consumer confidence when it comes to buying online.
Merchants must make as many efforts to prevent the damaging effects of account takeover fraud as they would to prevent chargeback and payment fraud.
Detecting and Preventing Account Takeover Fraud
CNP merchants should implement intelligent payment and fraud prevention solutions that use a multilayered approach. Account takeover criminals use the latest in advanced technology, and so merchants must have an equal or better level of technology working for them.
These fraud prevention tools include:

  • Geolocation. Verify the location of the customer with actual location of the active card.
  • Biometric analysis. Compare the customer’s fingerprint with that of the cardholder.
  • Address verification service. The issuer compares the address provided during the transaction.
  • CVV. Additional credit card security code required during the final payment authorization.
  • 3D Secure. A cardholder authentication protocol for e-commerce transactions and CNP purchases.
  • Merchant co-op. New orders are compared against millions of orders taken by other merchant contributing in-network and scrubbed for fraud risk.
  • SSL. Secure encrypted communication protocols between devices and payment solutions.

Merchants should also monitor customer buying habits with a sight to unusually high purchases, purchases from an unrecognized address, a change in address, or purchases from a new or unknown device. It pays for the merchant to have a proactive customer service team that contacts cardholders when they notice unexpected purchasing activity.
Using a solution such as Verifi’s Intelligence Suite provides you with the multilayered and intelligent fraud prevention technology you need to combat account takeover fraud. You can contact us to learn how our fraud prevention experts can help set up a customized solution tailored to your specific business needs.