The Top 500 retailer buys Campus Deals, which offers mobile coupons to college students.
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Iovation’s fraud detection applications fingerprint the device used to access a retailer’s site, such as a computer or handheld wireless device, then associate the fingerprint with fraud patterns in transactions, accounts, user names, e-mail addresses, mailing addresses, etc. Iovation’s retailer clients can also share information about suspect access devices to further aid fraud detection.
“We expose the links between accounts, transactions and the devices used to access the retailer’s site,” Karl explains. “Once those relationships are known, the device or the account can be gated and prohibited entry into the retailer’s system.”
Understanding these types of relationships helps retailers avoid imposing rules that result in their turning down a high percentage of legitimate transactions due to suspicion of fraud. Up to 8% of transactions are rejected as fraudulent by retailers that do not use applications to ferret out relationships among the access device, customer accounts, and transactions, when only 1% to 2% of transactions are actually illegitimate, says Clump.
In addition to losing sales, retailers damage their credibility with consumers. “Draconian fraud prevention rules feed the perception that e-commerce is highly prone to fraud and that e-retailers lack the systems to effectively combat it,” says Clump.
More complex and automated
Retail Decisions ReD Shield uses neural technology to identify all the components of a fraudulent transaction and the relationships among those components across multiple merchant categories, and assemble them in real time. This capability allows retailers to flag and review suspected transactions before making a decision on whether to accept, request more information from the consumer or reject the transaction.
“Fraud is becoming more complex and automated,” says Clump. “Neural-based fraud prevention applications that adjust to changing fraud tactics in real time are going to be essential for spotting fraud.”
Along with their growing technical sophistication, criminals are more knowledgeable about the fraud prevention strategies used by e-retailers, which makes cutting edge fraud fighting tools all the more valuable.
“Retailers need fraud prevention tools that do more than take a wholesale approach to prevention, they need tools that do the detective work of associating devices and accounts with negative behavior and that strike a balance between prevention and customer satisfaction,” says Karl. “Those kinds of tools give retailers confidence they can gate fraud and have near zero false positive rates.”
They are also the kinds of tools that can send criminals packing.