Merchants respond to card not present fraud
A poll of 379 online and offline merchants about their current anti-fraud efforts revealed most merchants are not only aware of fraud, but a majority are already addressing fraud through verification technologies. The survey was conducted jointly by SignatureLink Inc. and CardNotPresent.com in August and September 2012.
"We applaud the many merchants using active authentication techniques, but the user experience could be improved among legitimate customers by deploying risk-based passive authentication to invoke active authentication," stated SignatureLink Chief Executive Officer Greg Wooten.
First-generation Internet Protocol address prescreening filters can easily be bypassed and manipulated by fraudsters; second-generation geolocation solutions provide the greatest security, he added.
Key fraud survey findings include:
66 percent of merchants report friendly fraud levels between 0 and 5 percent
65 percent currently deploy customer authorization/validation systems
52 percent perform pre-fraud screening before payment gateway authorization
10 percent collect buyer voice/signature consent to terms and conditions
According to the study's authors, only 10 percent of respondents reported that they collect voice or signature consent to company terms and conditions (T&C) and refund policies, and the other 90 percent run the risk of exposure to "cybershopping," defined in this study as an incident in which a customer makes a purchase, receives the merchandise and then disputes the transaction with the credit card company, thus triggering a chargeback.
Unfortunately, an online link or pop-up to a merchant's T&C may not be enough to remedy the problem. "This approach is not in line with current regulatory standards and is actually considered deceptive," Wooten said. "There's no way for either side to prove their case or to determine what the T&Cs were for a given transaction. Had they captured a signature within the sales draft that carried a true chain of custody, it would be a different story - because in the e-commerce fraud space, the signature ultimately rules."
To view the SecureBuy 2012 CNP Fraud Study, visit