Five percent or more of the e-commerce transactions over the Internet are made with stolen credit cards, and a new financial services company aims to do something about the problem. Fraud-Check, Inc. Wednesday announced the launch of its new transaction patterning and unique modeling product to protect merchants from electronic shoplifters.
“The fraudulent use of credit cards — the electronic equivalent of shoplifting — is a serious threat to the emerging e-commerce industry,” says Fraud-Check President George Candella. “Visa International last year put the total losses at $32 billion and growing. This amounts to five percent or more of every transaction made across the internet, by telephone or by mail. We believe it is possible to reduce or eliminate these losses, and are creating the tools to make that happen.”
In a typical online transaction, the consumer fills a shopping cart or selects a product, then enters shipping and credit card information for approval. As long as the credit card number is valid — even if the number is stolen — the merchandise is shipped.
“If the same transaction took place in a store, there would be automatic fraud checking through signatures and identification,” says Candella. “But if the transaction isn’t done face-to-face, there is no system to protect the merchant. The consumer is protected by law. The credit card company suffers no loss. It is the merchant who bears the full financial liability.”
Fraud-Check serves as a protective barrier between the shoplifter and the e-commerce merchant. As a transaction is made online — at the same time the information goes to the credit card company for authorization — the transaction is checked against Fraud-Check’s proprietary (patent pending) process of patterning and modeling. By comparing against dozens of factors in the company’s multi-faceted, marketing neutral negative database, Fraud-Check can give the merchant the information needed to assess the risk and take appropriate action.
“Online merchants are easier to steal from because they ordinarily have no way of sharing their fraud experience,” says Candella. “We eliminate that problem by aggregating the experience of all of our customers, so if the shoplifter tries again we will have a far better chance of catching them with our database than any one marketer could on their own.”Details