facebook pixel image Credit Card Fraud - How Today's Top Companies are Detecting and Beating It

Credit Card Fraud - How Today's Top Companies are Detecting and Beating It

Over a dozen sizable data breaches occurred in the first six months of 2019 alone. Facebook, Canva, Westpac Banking Organization, and even the Singapore Health Sciences Authority have been affected.

Even when such breaches don’t include access to credit card or other financial information, the prospect of further leaks can make consumers jumpy.

Modern companies should address these concerns by improving their fraud detection efforts, which we explore in this post.

What are the major payment trends we should expect moving forward? What are some strategies that companies engaging in best practice are doing right? And what are some fraud detection trends to look forward to in the future?


Visallo solving AML and Credit Card Fraud


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The last several years have seen a marked rise in the popularity of eCommerce. With this, we have seen a significant increase in the potential for fraud. Consumers’ data — including credit card information and personal data — is stored on any number of servers by many companies.

eCommerce and Credit Card Fraud

The transition to eCommerce away from brick-and-mortar shopping has made it easier to commit consumer fraud. In the past, scammers would have needed a physical credit card and a physical likeness to potential victims to successfully commit retail fraud.

By contrast, online fraud must be detected via statistical models. Instead of looking at a name and physical appearance to trigger a warning bell, a computer looks to see if all of the data about a single transaction matches the patterns of data available for the user.

Voice & Mobile Purchases

Other payment trends in 2019 include the rise of voice purchases and mobile purchasing.

Voice purchases include those made by consumers who don’t have to physically press buttons to order something, such as orders placed via an AI assistant like Alexa or Siri. This purchasing option is expected to become more popular as consumers become more willing to make purchases on smartphones.

Mobile purchasing has continued to rise in popularity as cell phones continue to become more common. More recently, cell phone users have become more likely to make larger purchases right from their phone and more quickly after first making contact with a brand or product. This means that consumers are ordering from different locations: bookstores, classrooms, offices, and even the midst of traffic. In these places they are connected to different wifi networks and bluetooth devices.

Each of these networks and devices adds a new potential weak link to purchases that necessitates new defenses against fraud. While these options and possibilities make purchases easier and easier for consumers, they also provide more opportunities for hackers to connect with and take these same consumers’ card information and personal data. Each new wifi network or bluetooth device is a new opportunity for fraudsters to insert themselves into the process.

Thankfully, these same changes that make mobile purchasing more popular make it even simpler to contact a consumer to verify or alert them of fraud. This dual identity of technology, where any trend that can be harmful can also help us combat the harm, is the key to using technology well and avoiding fraud.


Visallo Dashboard for AML and Fraud


Dashboards and reports like the one above from Visallo help analysts spot and prevent fraud. Interested in Visallo? Set up a time to talk with us


Best Practices for Credit Card Fraud Detection

Most companies that take seriously consumer data security will be quickly evolving their response to match trends in fraudsters’ activity. They will see the acceleration in card-not-present (CNP) fraud and application fraud and respond with higher walls and better customer engagement.

They will stay up to date with any and all new technologies that help to detect fraud faster and more accurately, with the understanding that the methods of committing fraud are also changing rapidly.

As of 2014, reports stated that general use cards were better protected against fraud than were brand-specific cards. For example, cards issued by Bank of America, Wells Fargo, Suntrust, and USAA were more secure than those issued by Target, Cabelas, and Nordstrom. In general, credit cards are more susceptible to fraud than debit cards. This indicates that companies that issue brand-specific cards should make moves to engage with the same best practice detection techniques that financial institutions employ.

What’s more, fraud happening in any medium is time-sensitive. Fraud has a timeline. Account takeover fraud has an average resolution time of 16 hours, synthetic IDs often develop over a period of six months to five years, and there is a 4-30 day harvesting period for ATM skimming fraud. Institutions truly working to combat fraud will have real-time detection measures in place so they both know about and can alert customers to fraudulent activity in a timely manner.

Moving Forward: Updating Fraud Detection in 2019

Moving forward, many institutions and organizations have expectations for what’s to come in 2019. Most of these expectations are based on necessary responses to growing threats, and others are improvements upon existing safeguards.

First of all, fraud detection can be greatly improved with the proper use of machine learning and artificial intelligence.

Visallo uses machine learning to find and detect insurance fraud by looking at patterns in data with graph visualization, advanced search and analytics software. By detecting fraud early on, the program practically pays for itself by reducing false claims and inflated payouts. Visallo’s latest release includes named entity recognition and disambiguation, which can identify entities within uploaded text and connect them to open source information.

Another example of this is IdentityMind’s eDNA, a program that collects many individual data points that come to define each customer. Knowing so much about each person allows for more validation questions and checks against that same customer’s other activity. The metric isn’t static, so it changes over time as the customer’s activity does. The success of similar programs may make them more prevalent in 2019, as companies put similar AI to good use.

This kind of machine learning software can be especially critical as we look forward to eCommerce providers offering international ordering and shipping. While cross-border interactions have, in the past, been more likely to alert for fraud, it’s now important to look at a user’s entire digital ID to determine if a transaction is fraudulent.

Another expected trend is the development of further defenses against mobile fraud. More mobile payments means more opportunities for fraud amongst different devices, networks, and users. And it’s expected that mobile fraud will surpass desktop fraud rates by the end of 2019. This likely means that companies who offer mobile operations will begin to take security more seriously and put additional measures in place.

Of course, all of these trends speak to two overarching necessities in fighting card fraud:

  • the compilation and use of more consumer data to help validate suspicious behaviors and transactions, and
  • the accelerated use of modern technology to fit this consumer data to a reliable model.

Preparing for A Tech-Fueled Future

As fraudsters become more successful and creative, companies storing customers’ personal and financial data take on greater risk. But the same advances in technology that allow for fraud to occur in new ways also allow for new and improved security measures to constantly evolve.

Knowing trends in payment methods, fraud, and fraud detection techniques can equip companies with tools to effectively protect their customers.

Even if you never pay specifically as a result of fraud, you are paying towards money lost by companies to fraud. Card payments and transaction fees reflect money to lost to institutions, so a company that is more secure against fraud will likely also save you money.

You can also protect your customers by equipping yourself with technology and data to help you prevent and detect fraud to the best of your ability — and data visualization software like Visallo can help you do just that.


For more on Visallo and how it can help your organization strengthen your investigations, set up a time to talk with us or visit our videos page for an in-depth look at how investigations work with Visallo.