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Table of Contents

Lead Story

Marketing: Are you in or out?


Industry Update

Could community bank loans help the payments world?

Heartland settling up with Visa

Card sales' decline no longer accelerating

Card brand financials remain positive

Trade Association News


Anthony Martin

Glossary of common data security terms

Selling Prepaid

Prepaid in brief

From plastic to virtual: Evolution of stored-value

Walter Paulsen
Giiv Inc.


Debit rules and other musings

Patti Murphy
The Takoma Group


Street SmartsSM:
Look ahead, show you care

Jon Perry and Vanessa Lang
Merchant Services Inc., Fort Worth, Texas

POS unplugged

Dale S. Laszig
Castles Technology Co. Ltd.

Claws in merchant contracts

Adam Atlas
Attorney at Law

Managing your fraud risks

Nicholas Cucci
Network Merchants Inc.

Company Profile

IPP of America Inc.

New Products

Tracking the ISO beehive

Merchant Flo

Getting merchants to pay micro-ly

Integrity Payment Systems and
Quicksilver Payment Solutions LLC


Curing merchants' sales colds



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

February 22, 2010  •  Issue 10:02:02

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Managing your fraud risks

By Nicholas Cucci

As time passes by, technological changes are inevitable. New technologies come with new vulnerabilities, and data thieves nimbly locate and exploit weak spots at every turn. Fraud scrubbing, a term widely used in the payments industry, refers to the many techniques and systems being deployed by e-commerce payment providers and online merchants to help fight fraud.

Criminals relentlessly employ new technology to steal credit card, bank account and other personal information. Fraud prevention capabilities must also evolve to protect customers' information. A primary challenge online businesses face today is to always remain one step ahead of fraudsters.

Be aware

In the midst of the global financial crisis, the biggest fear of Americans is being victimized by credit and debit card fraud. According to the Unisys Security Index, concern about fraud supersedes fears of terrorism, computer viruses, health viruses and even lack of personal safety.

Also, Forbes magazine claims the majority of credit cards are still stolen the old-fashioned way - by unethical retail store clerks, as well as restaurant employees using skimmer devices. Merchants must develop techniques to combat fraud without making honest customers jump through too many hoops. That truly is the hardest aspect of managing fraud.

According to a Javelin Strategy and Research 2009 study, the number of U.S. identity fraud victims increased 22 percent in 2008, to nearly 10 million adults. The total annual fraud amount jumped just 7 percent to $48 billion. Wonder why? It is because consumers and businesses are detecting and resolving fraud more quickly.

Javelin reported that 71 percent of fraud incidents "began occurring in less than one week from when the data was first stolen, up from 33 percent since 2005." To combat this, cardholders need to constantly check statements and pending transactions. The most successful way of combating fraud is catching bogus transactions before they are posted.

Be proactive

What steps can merchants and ISOs take to reduce fraud? Roy Derby, a veteran law enforcement official and the current Director of Risk Management for America's BankCard Alliance LLC, said, "The credit card processing industry is based on risk, and it's our duty and obligation to mitigate the risk for our merchants. One of the most overlooked and basic ways to help your merchants is prevention through education."

But most retail sales personnel receive only entry-level instructions on how to use credit card processing equipment and how to detect fraud. However, ongoing training is essential, along with established policies on steps to take when suspicious activity occurs.

The small price of keeping staff updated on the latest scams and trends can have a positive impact, not only on your profit margin but on a store's reputation for zero tolerance.

When Derby stresses the importance of keeping staff informed, he tells of when he was a detective assigned to paper crimes (forgeries, bad checks and unlawful use of credit cards). He knew where the most fraud would occur simply by noting which stores had street reputations for being easy marks.

"Don't be that easy target; be the one the criminal decides to skip," Derby said.

Take these steps

Here's what you and your merchant customers can do to get the jump on fraudsters:

Nicholas Cucci is the Marketing Director for Network Merchants Inc. He is a graduate of Benedictine University. Prior to joining NMI, Mr. Cucci worked in the payment processing division for a Fortune 500 company and has advised several large retailers on credit card fraud protection, screening and risk assessment. Nicholas can be reached at or 800-617-4850.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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