Many merchants think they understand fraud — how it happens, how to stop it and how to prevent it. But fraudsters are much like viruses: insidious and ever-evolving. If fraudsters and infections aren’t stopped, they’ll quickly spread with potentially catastrophic consequences for their hosts.
[Written by Maria Forni. Maria has been working in ClearSale for three years and has vast experience with Business and Data Analysis, spending five years as Business Intelligence Consultant at IBM before joining ClearSale.]
Merchants must be able to identify the causes of fraud, monitor its evolution and adopt proactive strategies to prevent the spread of credit card fraud. By treating the health of their business as seriously as they do their own, merchants will improve their immunity against fraudsters.
Let’s look at the ways fraudsters are like viruses when it comes to credit card fraud and compromising a business.
They Survive by Taking Advantage of Their Hosts
Put simply, viruses invade living cells and hijack the cells’ machinery to replicate and spread the virus.
Fraudsters operate similarly. When cybercriminals launch a fraud attack, they take advantage of a merchant’s vulnerabilities, such as website susceptibilities, security lapses within mobile apps, employee corruption and delivery logistics. Fraudsters will take advantage of any weaknesses for as long as they can before being detected and moving on to the next unsuspecting (and unprotected) victim.
They Spread Quickly
A single viral infection can quickly grow into an uncontained epidemic, hitting quickly and hitting hard. In some cases, the virus is relatively harmless and causes only temporary discomfort. But some viruses aren’t so forgiving and can cause the host’s death.
If businesses are lucky, the effects of an inevitable fraud attack are minimal. A fraudster may test out a stolen credit card number with a few small purchases, but the most robust fraud protection program catches the attack in its infancy and stops it.
Some businesses aren’t so fortunate. Those who have been the victims of widescale attacks know how quickly dollars and products can disappear. And if a substantial number of chargebacks follow the fraudulent transactions, the adverse effects on revenue and reputation can be significant — even fatal — to an e-commerce business.
They Disguise Themselves
Unable to survive without a host organism, viruses must be resourceful and blend in. Some have evolved to encode proteins that are like those of human cells, meaning they can trick the host’s immune system into not identifying and fighting off the intruder.
Fraudsters are just as resourceful, and they’ll do whatever it takes to mimic a legitimate customer when ordering online. Using sophisticated credit card fraud strategies, fraudsters can:
- Match AVS numbers
- Answer confirmation phone calls and screening questions
- Match shipping and billing addresses with names
All this helps ensure an order looks legitimate, avoiding the red flags from fraud filters.
Think of the flu virus. Every year, the virus mutates, leaving researchers scrambling to match the flu vaccine with that year’s predicted strains. One wrong guess, and the vaccine is useless for the year.
Because fraudsters also continuously modify their strategies to exploit vulnerabilities in a business’s security system, fraud analysts must always be on their toes, researching the latest scams and bolstering security.
Even if fraud levels seem under control, the next fraudster or security breach is just around the corner. A business’s best security partner is one that stays one step ahead of the game and anticipates the next attack.
They’re Virtually Impossible to Eliminate
Viruses are one of the most common biological structures. Although it’s impossible to eradicate viruses, it is possible to understand their nature and behavior better — and that’s critical to developing the vaccines that can lessen viruses’ effect.
The same is true for fraud. Although it’s rampant throughout e-commerce, merchants with a comprehensive fraud protection strategy are better protected against numerous attacks, both seen and unseen.
Just as no vaccine is 100% effective, neither is every fraud protection solution. Sometimes, fraudsters get through despite a merchant’s best efforts. But those who employ a hybrid solution — one that combines machine-learning algorithms and expert staff trained in fraud validation and transaction investigation — are guaranteed the optimal balance of security and increased sales.
When it comes to integrating a credit card fraud solution into the e-commerce environment, it’s critical for merchants to select the right provider. Talk with a ClearSale credit card fraud analyst today to learn how our multilayered approach can prevent fraud attacks, protect against chargebacks and increase revenue.