With the COVID-19 pandemic still raging and many countries planning to introduce total lockdowns and curfews back again, e-Commerce is blooming in 2021. But with 2022 around the corner, we need to think ahead and plan sound strategies for preventing fraud if we want to secure our bottom lines from chargeback risks.
And fraud shows no signs of relenting, with Javelin 2021 fraud report showing there were more than $56 billion worldwide in combined identity fraud losses and various scams. As an ounce of medicine is worth a pound of cure, it’s better to prevent fraud before it occurs, rather than deal with its aftermath.
This is where Covery comes to your aid. As an end-to-end risk management platform, KYC/AML automation software, chargeback merchant services handling tool, and a comprehensive anti-fraud solution, Covery can help you with preventing fraud every step of the way. Read on to find out about 3 reliable strategies for preventing fraud for your online business in 2022.
Main fraud types of 2021
While there were lots of various fraud cases, 5 main types remain dominating:
- Identity theft. WIth people working remotely, scammers use various approaches — from phishing of all kinds to man-in-the-middle attacks to gain access to sensitive information. They then combine real details with forged ones to create synthetic identities and let them “live” for 12-18 months, get a history of payments, get a credit and pay it back — all to pose as a legitimate customer in order to maximize potential gains.
- Card-not-present fraud. From triangulation fraud and card checking to referral program abuse and other types of card-related fraud, this type of scam is not slowing down. The main danger here is not even the merchant chargeback losses — it actually lies in merchant chargeback risks.
As you well know, once your chargeback ratio exceeds certain thresholds, you are marked as a high-risk merchant, have to pay bigger payment processing fees, and have to go through Visa/Mastercard redemption program with fines from $25,000 to $50,000.
- Account takeover. If fraudsters can gain access to customer account credentials, they can do whatever they want — from changing delivery address to transferring bonuses to another account or withdrawing funds to another card.
- Malware. Various forms of malware can infect your customer’s computers, sniffing their traffic, stealing their financial data. As a merchant or provider of online financial services, you cannot ensure your customers are malware-free, of course. But you must have procedures and workflows in place to limit the fallout should you catch a sign that their accounts get compromised.
- Friendly fraud. Good old friendly fraud is not going anywhere anytime soon. Any customer can demand a return of their payment claiming they did not receive your products. As friendly fraud is supposed to grow 41% YoY, it’s best to implement some prevention strategies today.
Now, you’ve definitely known about these dangers before, but what can a merchant do to avoid them? Here is how using an anti-fraud system as Covery helps with preventing fraud for your business.
Preventing fraud with cohesive risk management from Covery
Let’s address these concerns one by one and show how Covery helps overcome chargeback risks stemming from various types of fraud.
- Synthetic identity theft prevention. Covery keeps track of every account’s individual identifiers during every session. Combining device fingerprinting, video verification with facial recognition, and behavioral analysis with Trustchain — a global database of reputation records, Covery identifies forged identities quite quickly, enabling you to block their access to your products and services, thus reducing the scale of potential damage.
- Card-not-present fraud prevention. While CNP fraud poses a significant risk, Covery is specifically built to withstand it — and is more than capable of doing the job. Due to combining device fingerprinting, IP screening, KYC automation, rule-based risk logic engine, and supervised Machine Learning, Covery risk analysts can identify any of the CNP fraud types — and deploy efficient countermeasures for every case.
- Account takeover prevention. There are distinctive signs of an account takeover. From logging from an unusual IP or geolocation to instantly initiating a password change procedure or transferring money/bonuses to another account. Covery flags such activity immediately and alerts you, so you can freeze the account operations and contact the rightful owner to resolve the situation.
- Malware prevention. You should run reliable antivirus and anti-malware platforms at your server at all times, as well as periodically check your databases and website pages for signs of cross-site scripting, SQL injections, Trojans, and other malware. Instate automated notifications for customers, should your systems detect malicious traffic going from their sessions. Covery experts can help configure this functionality.
- Friendly fraud mitigation. Due to integration with VMPI, Covery is able to immediately alert an online merchant when a chargeback inquiry is submitted at an issuer bank. This way, you can automatically provide all the required transaction details, so that the bank does not start a full-scale chargeback dispute with a PSP and your chargeback ratio stands unaffected.
With 38% of all customers switching their financial services providers in case of poor fraud handling, according to the aforementioned Javelin 2021 report, it is essential to have your bases covered. As end-to-end risk management and anti-fraud tool, Covery helps you get the right strategies and instruments in place and makes preventing fraud easier.
2022 is as good of a time as ever to secure your business from fraud. In fact, with identity fraud gaining pace, it would be a wise decision to prepare your business for this risk. Covery can help businesses in the USA, UK, Europe, and worldwide deal with all the types of fraud, implement efficient countermeasures, and secure revenues. To find out how else Covery can deliver value for your company — contact us for a free demo and let’s talk business!