How to Reduce Online Fraud Using Smart Technology and Common Sense

The rise of online commerce has led to the increase of frauds, usually related to identity theft. As a vendor, you want to avoid making your clients vulnerable to such problems or even help them protect their accounts and payment methods.

If credit card fraud goes undetected for longer, for example affecting cards that are not used often and not carefully monitored,  it could damage the user’s credit score and force clients to get into credit repair schemes, as described by the AAA Credit Guide.

The continuous cat and mouse game between security specialists and cyberthieves is far from over, but technology can be used both for preventing or reducing losses. We list a few tactics that could be put in place to secure transactions and offer more trust to your clients.

Install Secure Protocols

All online shops are required to use an SSL (secure socket layer) protocol to encrypt data between the client’s browser and the server processing the transaction. This is done to ensure an identity thief could not act as a middleman and intercept communication, read data, and use it as its own.

Another useful protocol to have in place is the 3D Secure. This is native to credit cards and ensures that the customer has the legal right to use that credit card. Simply put, this means having a username and password for your credit card. The best news is that by implementing this you are no longer liable for the transaction, it becomes the problem of the payment intermediation company.

If you want, you can add multiple authentication layers, like Google’s 2FA (two-factor authentification) which connects to the user’s phone. To complete a transaction the user needs to write a one-time code in the browser. This code is auto-generating every minute.

Verify Information

Depending on the size of your business, you can put in place a system or manually verify each order to make sure the contact details, shipping address and payment information are making sense. It could even enhance your business to contact the client and verify order details before shipping the merchandise. Always consider a red flag a non-existing phone number or e-mail address.

Another way of safeguarding against fraud is to set limits for transactions that would need to be checked manually. The usual triggers should include large orders, a sudden change of the shipping address, fake e-mail addresses, and requiring P. O. box shipping.

You can use web tools to identify the origin of the transaction. Check if the location of the browser corresponds geographically with the shipping address area or the contact details of the entity making the payment. Of course, anyone can all shop from abroad, but in this case, an additional security layer would not hurt.

Enlist the Help of AI

As artificial intelligence is becoming better and more affordable, it makes sense for companies to use it on a daily basis to secure transactions. The reasoning behind this approach is that people are creatures of habit and any changes in their behavioral patterns could signal a problem in the sale.

AI is excellent at learning about repetitive relationships, and it can run multiple layers of verifications at the same time. For example, the same software could check if the transaction came from the regular browser, located in the right geographical area, the login was within the usual time interval, and the value of the purchases fit the average spending of the customer.

The only note to be taken here is that most AI systems are rudimentary and they need the help and supervision of humans to be practical. To get the most out of AI use it just as a flag raiser, but be sure to follow through to ensure accuracy.

As the Internet of Things (IoT) is growing and payments are being integrated into messaging apps and other environments (smartwatches, fitness trackers), there is a real need for high-level security.