8 Interesting Ways to Reduce Online-fraud!

Before we proceed, it’s very important to look at your transaction data and analyse, which segments need what level of fraud control. For e.g. in some cases high value items attract the most fraud, however in many cases, in 2007, the frauds are happening in low denomination items!.

Hence depending upon, factors, (countries, domains, item value etc.), one needs to decide the investment and resources needed for fraud control:

So, here you go :

1. Extra verification: There is an innovative verification technique, I saw at the telesign website (www.telesign.com)

When the person clicks on submit button after filing up the signup for on your site, within a few seconds he receives a call on the number he has provided in the form...and there is an automated voice with a 4 digit pin no.

The customer needs to put that no. in the verification box on your website

We are assuming that a fraudster would not give his real no. in which case he will not be able to verify.

This entire process would take less than 30 seconds.

2. Motivate people for direct debit: give them incentive to use direct debit facility. One would need to tie up with various banks to offer this facility. Chances of fraud are less in this case.

3. Tie up with a credit card company to launch a corporate card...say… Xyz- BankAm credit cards.

Promote these cards on your website and offer incentives. The credit card company will verify the database and share the same with us. We can also use one extra step of verification (like sending a PIN): THIS pin will be delivered at the physical address of the person who has signed up for the card and is sent by the bank. Once received, the person needs to use that pin, while making any payments on your site.

Another benefit of this idea:

A cash back scheme/ frequent user scheme can be easily deployed for the card holders and will go a long way in promoting customer loyalty.

4. We can ask people to use only corporate/paid email ids. No free email ids are allowed.

(Most of the fraud cases are through free email ids): again this would hold true for the denomination where we see most of the fraud happening (say USD 50 and above).

I feel that in the next 6 months, e-commerce sites are going to be very strict on this, though this may seem a put-off initially, this scheme has a potential to go a long way!

5. Proactively sending emails to people after signups and asking them
to call you directly (and not their ban) if they think there is an error; goes a long way in reducing chargeback.

6. Industry negative database: Collaborate with other players in the industry and make an industry negative list. Or hire the services of a professional firm that can provide with updated negative list.

7. Need of a CSO/online security team for policy, application -implementation and control. A CSO brings in a professional approach to the challenges alongwith a thought-process guided policy, action plan and resources.

8. Order Velocity: Check the order velocity pattern across you site or various merchant sites . Deploy software that can check this, or form an industry consortium, and check this in real time.