Fraud Prevention: What’s Holding You Back?

Some people like to count it, whilst others like to hoard it and some (rather irritatingly) like to jangle it.

To what am I referring? Cash, of course.

However, one thing’s abundantly clear, we’re all doing less counting, less hoarding and, mercifully, less jangling. Because cash is no longer king. 

There is a pub in South London where, if you’re only carrying cash, you’re going to stay thirsty.

“Apologies, but it is the digital age”

-Crown & Anchor

Because in October, the Crown and Anchor went fully cashless. Only debit or credit cards are now accepted behind the bar.

And what’s more; there’s been no discernible downturn in takings.

Over in Sweden, whilst they are stepping towards it more cautiously, they are the closest of any nation to becoming a cashless society. A fifth of all Swedes no longer use an automated teller machine.

Across Europe, about one in five people say they rarely carry money. In Belgium, Denmark and Norway, debit and credit card use has hit record highs. In the U.K. cash use has halved in the last ten years with cash now used in only three out of every ten transactions.

Concerns might be raised over the impact of the reduction in the use of cash on parts of the population but there’s an even greater existential threat as a result of increased use of plastic and digital payment methods: fraud.

Retail fraud is on the increase. CNBC reported that last year the “level of fraud as a percentage of retailers’ revenues has climbed to 1.58 percent year to date from 1.47 percent,” compared to 2016.

Card-Not-Present

However, fraudsters have now turned their attention away from point of sale fraud to card-not-present (CNP) fraud which is becoming an organised crime activity.

According to Financial Fraud Action UK losses on UK issued cards totalled £618.0 million in 2016, a 9% increase from £567.5 million in 2015; the fifth consecutive year of increase and higher than the peak of £609.9 million seen in 2008.

At the same time, total spending on all debit and credit cards reached £904 billion in 2016, with 19.1 billion transactions made during the year.

In the U.K. the police’s Dedicated Card and Payment Crime Unit (DCPCU) has prevented £25m of payment fraud in the first half of 2018, including disrupting seven organised crime groups.

In addition, 8,651 stolen card numbers were recovered.

However, retailers say it’s difficult to verify someone’s identity online and the less advanced, less sophisticated legacy solutions still in use are no longer fit for purpose in the face of increased sophistication on the part of fraudsters.

The Game Just Got A Whole Lot Tougher

We take much for granted in this digital age and we embrace the ease and convenience which it presents to us.

But this also means that merchants and retailers must be ever more vigilant in the fight against fraud.

Techniques such as falsifying their location to get past standard fraud detection or making efforts to push fraud through in bursts before the new fraud patterns can be understood are becoming more commonplace.

The biggest trend the DCPCU are seeing is brokerage, or “fraud as a service”. Brokerage occurs when fraudsters carry out fraud on behalf of others.

For example, they might advertise an iPhone X for £750 on Facebook when the actual retail price is £999, use compromised card details to purchase the phone on behalf of the consumer and pocket the difference.

Often the consumer has no idea that there’s a fraudster playing middle man due to the sophisticated scale of operations and marketing tactics they use.

Take Action

In the fight against CNP and online fraud there is however some good news.

First invented by CA Technologies, A Broadcom Company and Visa, the just-updated EMV® 3-D Secure protocol brings a new approach to authentication through a wider range of data, biometric authentication and an improved online experience.

With the new protocol, CA uses its patented neural networks to analyse fraud patterns in real time, using unique data such as transaction velocity.

Crucially, it is possible to share data between banks and merchants silently in the background, meaning authorization rates can be increased with no perceivable change to the checkout flow by customers.

So, if you’re thinking of cheating a retailer, better check first to see if they are running CA Technologies EMV 3DS fraud protections. Chances are they may very well be – in which case, the game’s up.

For more information please click here.

Andrew Busby

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