Antifraud Toolbox

What tools are merchants using to ferret out fraudulent orders?

By Sarah D. Scalet

February 01, 2006 — CSO — What tools are merchants using to ferret out fraudulent orders? Below, highlights from a recent survey:

75%  Address verification service. Checks that billing address listed by customer matches billing address on file with credit card company.

66%  Card verification number. Asks customer for an extra security code, often printed on the back of a credit card above the signature lines.

32%  Address point verification. Confirms a valid shipping address.

29%  Payer authentication services. Prompts users who have signed up for Verified by Visa or MasterCard's SecureCode for an additional password.

28%  Company-specific fraud screens. Checks order against company-specific data, such as typical order quantities.

27%  Negative lists. Checks mailing address against a database of addresses associated with past chargebacks or fraudulent activity.

25%  Automated decision/order screening. Uses a system that filters inbound orders based on business rules, automatically marking each order "accept," "reject" or "review."

25%  IP geolocation information. Checks whether the IP address of the computer used to place the order is physically near either the shipping or billing address.

24%  General industry model fraud screens. Checks for anomalous behavior that's not specific to the merchant.

23%  Velocity monitoring. Looks for patterns such as multiple orders going to one address or multiple customers with the same IP address or e-mail address.

Read more about fraud prevention in CSOonline's Fraud Prevention section.

Other stories by Sarah D. Scalet

• Print

• Choke Point: Preventing Credit Card Fraud
• How to Prevent and Detect Fraud
• The Fraud Squad
• Jim Ratley and ACFE: Going Broad on Fraud