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BizReport : Trends & Ideas : October 13, 2021

Top 3 tips to prevent CNP fraud

Card Not Present (CNP) fraud prevention is a tight wire to walk for many organizations. Blocking too many legitimate transactions results in lost revenue, not block enough means millions spent on charge-back fees. We asked one expert how businesses can create a better CNP fraud strategy.

by Kristina Knight

First, think of the fraud department as a partner, not a cost center

"Too often risk and fraud teams are looked at as a cost, rather than an opportunity. Investing in a sophisticated fraud prevention solution will keep your company safe, increase consumer confidence and ultimately grow your topline revenue," said Ron Hynes, CEO, Vesta. "Merchants that do it right, see their fraud solution tech provider as a partner and an extension of their team rather than a narrowly defined line-item expense. Direct revenue losses and customer attrition associated with false positives or a tarnished brand all can be prevented with the right approach to identifying the good and the bad transactions. Unfortunately, many companies often overlook this opportunity and focus instead only on fraud losses rather than the full value. By tasking your fraud group with lowering fraud and growing the percentage of transactions that are completed successfully, you are empowering them to drive better overall results."

Second, remember to communicate

"It's important that merchants find a healthy balance between preventing fraud, maximizing approvals of legitimate transactions, and delivering an exceptional customer experience. Today, most consumers expect a seamless online shopping experience. As a result, too often we see merchants improving usability, and inadvertently creating potential vulnerabilities," said Hynes. "The opposite is also true - excessive fraud controls are likely to discourage legitimate customers and cause transaction abandonment. Therefore, the efforts to improve security and user experience should be coordinated and shared across the organization. Additionally, employees in fraud-prone areas of a business should be aware of the warning signs and ensure that others are on alert. By developing the right prevention skills, merchants can streamline the process in reporting questionable behavior. It's important that all departments are collaborating and communicating effectively to reduce risk."

Third, understand the trends

"One critical aspect of fraud is that it is, by design and necessity, reactive. When a hole gets plugged, fraudsters move on. They may move elsewhere to easier targets, or they may move to new techniques. In the world of evolving fraud patterns, when one company closes a gap, the perpetrators often find the next target - someone who is still exposing a vulnerability. Once the next opportunity is identified, they scale their efforts rapidly to proliferate the next attack. Almost by nature, these attacks involve patterns that have not been seen before, making it hard for your analysts to detect. To be able to rapidly identify and respond to fraud attacks, merchants should make use of modern alert and anomaly detection algorithms, and constantly review interactions to detect new patterns," said Hynes.

Data from Vesta's Evolution of CNP Fraud report can be found here.

Tags: CNP and ecommerce trends, CNP fraud tips, CNP fraud trends, ecommerce, ecommerce tips, Vesta

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