Fraud Detection Best Practices & Tools

In the faceless world of the Internet, online transaction fraud is one of the greatest challenges for web merchants. Advanced solutions are needed to protect merchants from the constantly evolving problem posed by fraud. Practice Pay Solutions gateway powered by Authorize.net offers you an Fraud Detection Suite. This customizable solution arms merchants with advanced filters and tools to combat the most common types of online transaction fraud facing merchants today. We offer the Fraud Detection Suite with no set-up fee and at our cost because we believe so strongly in the value of this service. To see our complete fraud prevention suite of services, please click here.

Fraud Detection Suite Fees

We are waiving the set-up fee and providing this service to you at no cost.

Monthly fee: $0 (normally $5 a month)

Existing Clients

To sign up today, you must request this in writing with your Merchant Account Login ID and company name.

New Clients

To have the Fraud Detection Suite set up, click on the appropriate Apply Now button below and check the corresponding box in the application.

All Merchants Are Potential Targets

Regardless of size, transaction volume, or Internet expertise, all web merchants are susceptible to online transaction fraud. Hackers and fraud perpetrators are becoming more sophisticated and skillful at manipulating Internet protocols and structures to discover any weakness they can exploit. Thousands of web merchants experience fraudulent transaction activity every day – and it can happen to you.

Standard Verification Tools Are Not Enough

Standard verification tools developed to help merchants screen transactions, such as the Address Verification System (AVS) and Card Code Verification, are limited in the level of protection they can provide. Criminals have learned how to interpret AVS and Card Code Verification responses and are not always deterred by the use of these tools. As a result, using these tools alone for protection against fraud is no longer sufficient. Merchants need to look to additional, more advanced solutions designed to fight fraud, such as the Fraud Detection Suite.

Common Types of Fraud

Web merchants most often face two types of transaction fraud.

Verification Fraud: Criminals obtain or generate potentially legitimate credit card numbers. By submitting orders at a merchant’s online store, they can determine whether the numbers are valid. They are not seeking immediate financial gain, only information. But for merchants, the repercussions can be costly when they pay processing fees for these fraudulent orders.

Settlement Fraud: Criminals will purchase goods online and attempt to get merchants to ship large quantities to a location other than the billing address of the cardholder. Their motive is to steal as much as they can as quickly as possible. By the time the chargebacks come rolling in, merchants are left with no payment and no way to recover the product they shipped.

Combat Online Fraud Using the Fraud Detection Suite

In addition to using the standard security tools built into the payment gateway, such as AVS and Card Code Verification, merchants can now implement advanced fraud prevention. The customizable filters and tools of the Fraud Detection Suite provide merchants with a greater degree of control over the transactions they accept, and can prevent costly authorization and chargeback fees, plus the potential loss of inventory that can result from fraudulent transactions.

The Power of the Fraud Detection Suite

The options available in the Fraud Detection Suite allow you to flag transactions as potentially fraudulent or decline them automatically. The most frequently used options are:

Amount Filter - Allows you to specify a lower and/or upper limit for your transactions. Your lower limit should be the lowest sale amount you would expect from your store. An ideal upper limit is $1000. You should contact the customer to verify the order before proceeding with the transaction.
 
Velocity Filter - Allows you to specify a threshold for the number of transactions allowed per hour. Fifty transactions is a good number to start with, but you should monitor or review your processing trends over several weeks to help you determine an appropriate limit.
 
Shipping/Billing Mismatch Filter - Allows you to compare the shipping and billing addresses provided by the customer. The transaction is flagged if the two addresses do not match.
 
Transaction IP Velocity Filter - Allows you to specify the maximum number of transactions allowed from the same Internet Protocol (IP) address per hour. If your account receives more transactions from the same IP address in one hour than the threshold you set, all additional transactions received that hour will be flagged. We recommend setting this to five transactions per hour.

Protecting Your Business From Fraud

Online transaction fraud is real. To an unprotected merchant, the effects of fraud can be devastating. It is essential for merchants to protect their online business as carefully as they would a retail store. In addition to standard security practices and verification tools, solutions like the Fraud Detection Suite are a necessity.

For additional recommended fraud prevention solutions, please click here.