Spotting a True Customer or a Fraudster

With the current health crisis that the world is fighting, almost every business had to adapt and switch their transaction or payment method online. This may sound confusing to companies that didn’t have an online presence until now, but it is also the most convenient and practical transaction method.

This brought benefits to everyone as it made it easier for everyone to access goods and services around the world. But unfortunately, all of this good is followed by some bad. Cybercriminals have also noticed these benefits, and decided to take advantage of them. One of the most popular tactics cybercriminals are using for e-commerce fraud is the Card Not Present (CNP) transaction fraud.

Luckily there are some cyber security tools you can use to differentiate between true customers and fraudsters and start protecting your business.

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What is a Card Not Present (CNP) Transaction?

Before heading to solutions, let us identify first what Card Not Present or CNP transaction is all about. Your business can always be a target of cybercrime activities, so if you are not already familiar with this type of fraud, it is time to learn what it is and what steps you can take in reducing CNP fraud.

As the name implies, CNP is a transaction that is processed via credit card using only the card information such as card number, cardholder name, and security code. It doesn’t require the physical presence of the card to make the transaction work. Simply put, this is a kind of online transaction that makes the process faster and more convenient for customers, but at the same time, it makes it easier for cybercriminals to conduct CNP fraud.

How Does Card Not Present (CNP) Transaction Fraud Occur?

This fraudulent attack happens when during an online transaction a cybercriminal pretends that they are the card owner and tries using their card. CNP fraud becomes possible due to various reasons, such as fraudsters gaining access to all cardholders’ information through online data breaches, deep web transactions, or phishing. Did you know that in the financial and insurance industry 83% of compromised data was personal data? Data that cybercriminals can use further and conduct additional types of fraud like CNP fraud, identity theft, or account takeover. Sad truth is that with the advancement of technology it is getting easier for fraudsters to do illegal actions.

How to Protect Your Business Against Card Not Present (CNP) Transaction Fraud?

CNP fraud can cause significant damage to your business, not only financial but also reputational which is why you need to do everything in your power to protect your customer and your business. Especially because nobody knows when they are going to attack. This is why you need to start implementing proper cyber security protocol and you can start with the following strategies.

1. Gathering User Data

This may sound too simple to really be a security tool, but this has been one of the most proven and tested methods of keeping your customers safe from cyber fraud. Basically, the more customer information you have in your database, the easier it will be to notice any change in their usual behavior and differentiate between your customers and fraudsters. 

You can potentially gather these data like email address, contact number, IP address, and much more, during the registration stage or during the transaction process. Data enrichment is an especially useful cyber security tool to use in this strategy as it allows you to collect all of this data without impacting customers too much.  For example, it can be used to confirm the email address wasn’t involved in any data breaches or that isn’t registered on any spam blacklists. 

By collecting as much data as you can, it will become easier to identify suspicious transactions and take necessary actions like blocking the user or requiring additional verification methods.

2. Analyzing User Behavior

Analyzing user behavior can tell you what red flags you need to keep an eye on based on the customer information that we have gathered from the previous method. Here are some possible actions that you should look out for.

  • Numerous changes to a single account in one session.
  • Numerous failed login attempts 
  • Numerous password reset requests.
  • Numerous customers using the same IP address.
  • Numerous changes in the shipping address.

3. Extra Authentication

Previous steps have given you insights into your customer and their level of risk, and this step will provide you with a tool to reduce the risk. Once one of the previous steps raises a red flag, the extra authentication layer will activate and ask the user to provide additional verification methods. While legitimate users will be able to do this, cybercriminals will not.

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