“Card not present fraud is a major problem which is not going away and clearly is getting worse as criminals increase their efforts to steal from retailers,” explains Paul Simms, CEO of the 3rd Man Group. “We aren’t just talking about petty thieves and opportunists here. This money also funds illegal drugs, organised crime and terrorism.”
Retailers have become a soft target for fraudsters, although the introduction of Chip and PIN dealt a massive blow to criminals. Changing their focus to ‘card not present’ fraud, where the buyer does not have to be physically present at the point of transaction (such as Internet and Mail Order shopping), fraudsters have evolved their techniques to con retailers out of millions of pounds.
However, many responsible retailers are now fighting back by using behavioural data screening techniques and by sharing their data through initiatives such as SuperSearch which scans millions of ‘live’ transactions for retailers each month.
“Behavioural analysis detects around 80% of all attempted frauds, but retailers can be stung by exactly the same fraud committed with another retailer. By sharing their data they are protecting each other and in doing so will already save over £100 million in 2008,” says Simms. “But more can be done. We have a real opportunity to get on top of this problem through managed collaboration, involving retailers, consumers and the banks.”
Shared databases contain clearly fraudulent and highly suspicious data, including listings of bad or questionable details such as email addresses, delivery addresses, phone numbers, IP addresses and card numbers.
Shared databases are not restricted to retailers as banks can also integrate their systems with services such as SuperSearch. “When fraud is detected a data feed is sent to the respective bank informing them that their cardholder has had details compromised,” explains Simms. “They can then act to re-issue the account number and possibly block the card. In the same way the banking community succeeded with Chip and PIN, this is another major way to protect retailers from card not present fraud.”
