How Can Businesses Stay Safe from Online Fraud

online fraud

Online fraud is more persistent than ever and the probabilities of online fraud increase all the time. The growing trend in online misbehaviour is caused by the rise of the technology, digitalisation, computer networks and their integrated nature with businesses. For example, identity fraud committed with credit cards and bank accounts rose by 49% in 2015. One of the major concerns is that fraudsters have found ways to use computers to fake human online behaviour. This situation implies a lot of costs related to compliance and fraud detection. As a result, tens of billions are lost every year. Businesses have to adhere to ever stricter security procedures, more so as the number of online financial transactions continues to increase.

 

Chargeback Fraud and its Prevention

Chargebacks represent a large portion of the online fraud. Chargebacks are harmful for merchants and card issuers since they require time for investigation and can negatively affect profits. Chargebacks can occur for several reasons. The most common are:

  1. Fraudulent Transaction: Cardholder did not give consent for a transaction
  2. Credit Not Processed: Cardholder was never credited for returned merchandise
  3. Item Not Received: Cardholder was charged but never received the item
  4. Technical Problems: Invalid connection between the merchant and issuer can result in a double charge

Merchants are able to eliminate fraudulent chargebacks if they are equipped with the necessary knowledge and the right tools. There are several consumer authentication solutions that can help to eradicate most of the investigation time and costs of chargebacks for merchants. The majority of the available solutions addresses the following situation: If there is a suspicious order, merchant or the bank can choose to challenge the cardholder (so called active authentication), insert a one-time password, or use biometrics to authenticate the user.

 

online fraud

 

How to Catch Online Fraudsters?

Online fraud is one of the unfortunate side effects of the digitalised world. By 2040 more crimes will be committed by machines than humans.  In order to measure, mitigate and detect  cyber crime, there are several solutions on the market using leading-edge technology. For instance, smart robot technology that can mimic human behaviour to interact with cyber criminals and infiltrate their networks. Businesses need to be aware of any potential cyber threat and leverage the technology to monitor, detect and protect their organisation and customers. Combating cyber crime is as complex as the fraud itself.

Many SMEs rely solely on the fraud detection provided by their payment gateway. However, the role of a payment gateway is only to validate the customer’s credit card details and to ensure that the funds are available for the payment. They have limited ability to provide end-to-end fraud protection.

Businesses need to put protocols in place that are able to address crime across all spectrums, from criminal experts to amateurs working from a home computer. At the same time, businesses need to offer a good user experience without bothering legit customers with difficult procedures. Businesses need the technological capacity to identify unusual behaviour. Businesses that educate themselves, use prevention software and partner up with experts are the best geared to eliminate cyber crimes.

 

Our Approach to Online Fraud

At Coinify we care about the security of our customers. We use the best available tools to protect our customer’s funds and review suspicious transactions. We operate with a high level of legal compliance and follow all existing KYC and AML regulations. Since there are no blockchain regulations in place yet, we strive to self-regulate our activities to operate on the bank grade security level. Furthermore, our employees adhere to the security procedures to make sure that all the customers’ data is well secured.  

 

Blockchain Mitigates Online Fraud

Blockchain is the technology created for the digital age and one of its core functions is to address online fraud. However, this technology is still in early implementation stage to bring about financial transformation and improved transactions among people and businesses around the world.

Blockchain is a database like any other, yet with unique qualities to fight fraud in online transactions. It is highly secure and impenetrable: the technology is build on data blocks, where each block holds batches of individual transactions that cannot be reversed. Blockchain transactions also protect customer identity by sharing only the information that is needed for a specific transaction (and not revealing private data) with the merchant. When a payment is made with a credit card in online environment, sensitive customer data is sent along with the payment to the merchant and stored in their database. If this database gets compromised by cyber criminals, customer’s sensitive information is at risk of being used in future online fraud attempt. Consequently, blockchain payments are more secure for merchants and consumers.

 

Did you enjoy reading this article? You might also be interested in: How does a blockchain company navigate in an unregulated environment?

 


Image credits: Typographyimages and Pixelcreatures (Pixabay)

To learn more about blockchain payments visit Coinify Website.