If you make a list of the most popular types of fraud in e-commerce, credit cards would be well worthy of the top spot. Unfortunately, nothing is easier for unreliable shoppers than to purchase with their credit card, then request a chargeback and insist that they have not made any payments.
They hope that either firm does not know what credit card fraud detection is and how credit card fraud detection works, or they don’t want to go to the conflict and decide to return the payment and pay all the associated charges.
The problem is that the more often the company takes these costs and sides with the customer in disputes, the higher the number of fraudulent transactions.
A machine learning-based credit card fraud detection system will do everything possible to prevent such transactions. It will save money and time not only for merchants but also for honest users.
How does credit card fraud detection work?
For this purpose, special tools and programs are used, thanks to which it is possible to identify quite suspicious behavior of buyers in transactions. We all know that our behavioral habits govern us and if a consumer has made a purchase for $20 and then suddenly bought a product worth $5,000 or $10,000, that transaction can be considered suspicious even without any software.
Unfortunately, such situations are not very common and scammers have learned to disguise their schemes so cleverly that it is almost impossible to detect fraudulent transactions without special checks and services.
One of the tools to detect fraud is to check your credit card for signs that it has been illegally accessed or stolen.
If a purchase transaction was made without a card, and it has a high degree of risk, additional verification of such a transaction is necessary.
Often credit card fraud is committed by people, not just for their benefit, but to get back at a company for something, such as poor service. So to reduce the number of such cases, it is necessary to train staff to provide quality customer service and act according to clear standards of service.
An excellent way to combat fraud would be a personal call to the client to clarify all the circumstances surrounding the disputed transaction. After all, if scammers in correspondence very often respond according to a pre-planned scenario, catching them off guard will make you get truthful answers from them or feel a lie.
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What else can a merchant do to detect fraud?
To detect credit card fraud in time, you need to make sure that the company that processes payments complies with all security requirements, particularly PCI-DSS.
Besides, it helps to fight fraudsters by checking the CVV. They manage to steal a card number, but they don’t know the CVV. Without the physical presence of the card, this information will not be available.
Artificial intelligence stands guard over the interests of the company, analyzing a huge amount of data on the transaction and categorizing it according to the level of risk.
All transactions that turn out to be suspicious undergo additional verification before they even reach the processing stage.
Customer authentication using 3D Secure is also one of the ways to combat fraud. The disadvantage is the longer processing time and possible dissatisfaction on the part of buyers. Explain to such buyers that these measures related to verification are necessary for their safety.
Also, pay attention to what products are most commonly used by scammers for their benefit and to recover payments. Scammers buy such goods to resell them later.