West Marine has learned the ins and outs of fraud prevention and detection. By utilizing internal systems and services from its credit card processor, the water craft and sport accessory retailer uncovered internal fraud in its catalog operations that created significant exposure. One of the key tactics that helped nab the dishonest employees was contributed by Paymentech, the marketerâs payment processor. Paymentech identified false credit card refunds that proved to have no recorded corresponding order and payment transaction.
Paymentech clients have benefited in many ways from such fraud prevention and detection tools and services. For example, Paymentech has identified and helped stop 13 cases of internal fraud this year alone as well as reducing external fraud risk. Paymentech, the largest credit card processor for direct marketers, is highlighting testimonials from major direct marketers at the Direct Marketing Associationâs annual conference held October 11-14 in San Francisco.
“Paymentechâs fraud prevention tools are a superb complement to internal controls,” said Dave R. Rowan, director of management controls for West Marine Products. “Paymentech has developed some excellent products geared to the special needs of direct response marketers. They are a great partner for both customer service and fraud control.”
In West Marineâs case, order entry personnel generated false credits to personal credit cards. Paymentech has developed specific internal exception reports to assist Paymentechâs risk management staff in detecting unusual and potentially fraudulent activity. The risk group, utilizing their experience and knowledge, are quick to identify significant variances or exceptions which warrant closer review and investigation.
Paymentech noticed irregularities on West Marineâs refund report. The payment services provider tracked down and confirmed the suspicious transactions and verified the cardholdersâ identity. With this evidence, West Marine was able to confront the suspected employees, who confessed to the crime. The company also implemented extra internal controls to address the risk issue.
In addition to specific tools, many merchants benefit from consultation with Paymentech on how to enhance internal processes. According to Sam Rivera, accounting and collections supervisor with automotive parts direct marketer JC Whitney, “This kind of support enables us to focus more on customer service. Paymentech supplies data for our systems and their transaction activity reports aid us in monitoring internal and external exposure.”
Some of the recommendations that Paymentechâs direct response unit makes to clients through fraud seminars and training include the following:
track orders to recognize patterns that are above normal purchasing trends,
attach order numbers to every credit processed so that loss prevention can identify credits that do not have a corresponding sale or original order,
do not issue refunds to “no charge” shipments,
create reports to track and verify high dollar returns and non-receipt claims,
purge prospect lists against external negative file sources and exclude the hits from marketing efforts, and
use telephony resources such as caller ID to capture fraudulent numbers for a negative file.
Paymentechâs management system reduces the administrative burden of risk management for customers using its direct marketing processing. A few of these tools include:
Address Verification System (AVS): Paymentech pioneered this service with the card associations specifically for direct marketers. By passing the cardholderâs “bill to” address during authorization, direct marketers can verify it matches the address with the card issuing bank.
Automatic AVS: Ordinary AVS messaging requires merchant intervention to determine whether or not to ship product. Paymentechâs automatic AVS manages this processes through preset criteria that automatically determine whether or not Paymentech processes the transaction or returns it as a non-deposit item.
Transaction Ceiling Limits: This function blocks any transaction greater than a dollar amount (average order value) that a particular merchant pre-establishes.
Personalized Risk Management: Paymentech monitors current customer activity against a historical data base that can detect abnormalities.
Duplicate Detection: Paymentech scans incoming deposit files to determine if duplicate transactions were previously processed on the merchantâs behalf. Repeated purchases of the same amount often indicate fraud.
About JC Whitney
Established in 1915, JC Whitney (Chicago, IL) is the largest direct marketer of automotive parts and accessories. Known for being a source of unique, hard to find and custom products for vehicles dating back to the 1920s, JC Whitney offers over 55,000 high quality brand name and private label products with 4.2 million applications for domestic and imported cars, pickup trucks, motorcycles, and JeepÃ and VolkswagenÃ vehicles. JC Whitney markets to millions of customers â including auto professionals, hobbyists and businesses â through its family of catalogs and Internet site ([jcwhitneyusa.com]).
About West Marine
West Marine is the nation’s largest specialty retailer of recreational and commercial boating supplies and apparel, and operates under the names West Marine and E&B Discount Marine. The Company sells through 212 specialty retail stores, the Internet, catalogs and through a wholesale division operating under the name Port Supply.
Paymentech, Inc., founded in 1985, is the leading provider of full-service electronic payment solutions to the direct response industry (catalogue, direct marketing, telemarketing and response television). Paymentech is the nationâs third largest processor of bankcard transactions and a leading issuer of MasterCard and Visa commercial cards.