Three easy steps to reduce online fraud

Nowadays the problem of Internet-scammers is actual for e-shops like never before. There are plenty of terrible stories over the global network telling us about e-merchants' huge losses.

Merchants with excessive chargebacks are usually placed in a so-called (Terminated Merchant File) TMF match list. The parties on this list are stripped of their merchant account and the ability to accept credit card orders. Being placed in this file can keep an e-shop from obtaining another account for several years. All the Merchant Service Providers have open access to the TMF match list.

Merchants' impossibility to accept online credit card payments is very inconvenient for their e-customers because about 90% of e-purchases are paid by credit cards.

There are a couple of ways to combat online fraud and protect your business - a great number of companies offer their special solutions in order to minimize fraudulent transactions. Now we will go deeper into this trouble and try to find the most outstanding method.

Let's examine a typical e-shop and a typical shop-engine.

I. The processing of primary information

Each order provides a merchant with personal, geographical, technical and financial information about a client.

Personal information contains the customer's full name and his/her e-mail address. The geographical data consists of their detailed address including city, state, zip-code and shipment information. Technical information allows an e-shop's owner to find out the IP address of their client, their browser type, browser language and the OS language. The financial information contains their CC Number, CVC, CC Name, CC Bank.

At the first stage all the information should be checked in order to avoid obvious fraud (e.g. a client from England places an order for a good in Japan or a client with a German credit card and Chinese IP address orders a good in the United States). Let's call this stage the verification of primary information. It should be done manually because no script or robot can verify it as well as a man can. The most part of the lame's fraud could be recognized at this stage.

II. The processing of additional information

Today a rational solution is provided by ProveOut Company - an automated call to a client with the request to enter a certain PIN code by using his/her phone keypad. The aim of this action is to authorize a customer.

Once such an authorization has been made a merchant can be sure that the customer's number is in fact his/her telephone number and a client is available by it. The next step is to determine the customer's location by the telephone number. This service is provided by ProveOut at no extra fee when a verification call is initiated.

Telephone verification is very cheap in comparison with merchant's chargebacks caused by fraudsters. For instance, a typical telephone authorization for a client from the United States costs 15 cents. This price is also applies to actual for customers from the United Kingdom, the Netherlands, Germany, France, the Australia. A client from Latvia, Mexico or Colombia can be authorized at the price of 25 cents per call.

Our service can check a customer's telephone number against a special telephone database that identifies the phone number type. ProveOut finds out whether if a client uses a cell number or Skype in order to hide their real location. Such clients should be referred to as being suspicious.

So, ProveOut can verify the type of phone number a client uses and get a confirmation of the client's wish to make a purchase in a given e-shop. This goal is achieved by the simple telephone authorization service. More than this, ProveOut provides the opportunity to record a customer's voice in order to prove that he/she has actually made a purchase and won't decline it as they sometimes do.

III. An analysis of primary and additional information

With the help of our telephone verification service a merchant can get an authorized client's phone number. Afterwards the known number is compared with technical and geographical (country, city etc.) information about the client. ProveOut also correctly determines the phone number type (fixed location phone, cell number, or Skype).

Later all of the information is compared and if everything matches the merchant can make decision whether to allow a transaction or not. If the merchant has doubts on the one hand and is unwill to lose a potentially fraudulent client on the other hand an e-shop's owner can beg for additional information such as credit card scan, passport scan or utility bill scan. This takes some time but also minimizes the possibility of fraud and practically reduces it.

To sum up, a merchant can easily save their money by paying no fines to Visa/MasterCard. At the same time a merchant saves their client from choosing a competitor who may have a weaker system of fraud verification.