The financial impact of fraud on U.S. merchants continues to grow, with the number of attempted and successful fraud attacks on the rise from 2019 to 2020.
Such are the findings of a report from research firm Nexis Lexis who interviewed hundreds of retail and e-commerce executives in the U.S. and Canada. In addition to an increase in fraud attacks, a merchant's costs to remediate an attack increased 7.3% from 2019 to 2020—now every dollar of fraud is estimated to cost a merchant $3.36.
With these stark statistics as a backdrop, J.P. Morgan's fraud experts share eight best practices for avoiding, detecting and mitigating card-based payment fraud.
Here are eight ways merchants can keep revenue and fraud mitigation priorities in balance:
01 Partner with a trusted fraud security provider.
Your payment processor should provide end-to-end transaction safeguards that can scale and adapt to your evolving needs.
02 Monitor for uncommon customer payment behavior.
Suspicious customer behavior, like splitting payments across cards, can be a sign of preventable payment fraud.
03 Be vigilant against unusual order volumes.
First-time customers with unusual initial order attributes may turn out to be fraud actors proving for platform weaknesses.
04 Watch out for an unusual focus on delivery times.
Customers with an unusually high focus on the timing of order fulfillment can also indicate payment fraud in process.
05 Only refund same card used for purchase.
Refunds should only be issued to a card used for the original purchase, otherwise you could be playing right into a fraud actor’s plan.
06 Mandate strong customer authentication.
Require customers to protect their accounts with strong passwords and authenticating information to safeguard against account takeover.
07 Give suspicious transactions a closer look.
Have the ability to flag suspicious ecommerce transactions and subject them to additional levels of digital authentication.
08 Use 3-D Secure protocols and amount thresholds.
For transactions over a defined amount, use two-factor authentication to verify customer’s identity prior to payment authorization.
JENIFER SMITH, PRODUCT MANAGER, J.P. MORGAN
Jenifer has been in the payments industry for more than 20 years, with the majority of those years dedicated to product management across a range of solutions including reporting, point-of-sale terminals, mobile payment applications and currency services. Most recently at J.P. Morgan, Jenifer has overseen the Safetech encryption and tokenization suite of tools with a focus on maximizing merchant benefits as the digitization of sales channels rapidly accelerates.
Need a turnkey fraud solution? Safetech Fraud Tools delivers.
Using artificial intelligence and machine learning, our powerful fraud mitigation solution features multi-layer device fingerprinting, proxy piercing, dynamic order linking, dynamic risk scoring, custom rules management and auto-decisioning.
Safetech's Identity Trust Global Network and machine learning algorithms can immediately alert merchants of signs of card testing attacks. Best of all, Safetech can be implemented quickly and rapidly provide e-commerce fraud protection.
To learn more, please contact your J.P. Morgan representative.
