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Merchant Account Fraud – 3 ways to protect your business

Posted by Alex Neir on Thu, December 01, 2011 @ 03:33 PM
Merchant Account Fraud Protection

With the proliferation of the digital era more and more businesses are seeking the ease and convenience of the internet to increase sales. Unfortunately, the criminally minded have seen this as a giant opportunity to maliciously profit from unsuspecting businesses. As a business utilizing the internet as a sales channel how do you protect against potential losses from such criminals?

The answer is a fraud detection solution.  

Most fraud detection solutions are based on a management utility that allows merchants to configure extensive filters to help in detecting fraud and screening suspicious transactions. The combination of an extensive reporting system gives merchants a quick and easy way to review transactions, block suspicious activity, and zero in on malicious users.

3 ways to protect your business from merchant account fraud utilizing a fraud detection solution.

  1. Thresholds – Allows your business to set specific parameters for detecting fraud
  2. User bans – Ban specific users by IP address, credit card number, country, etc
  3. Exceptions – Set specific exceptions to make sure you don’t exclude legitimate customers

Merchant defined thresholds

Thresholds let your business define rules that are applied to each order as it is processed. Rules can be simple to complex and can apply in sequence. For example you can define a dollar limit for a specific order, total for the day or week. You can also set up limits for the number of orders in a given day or week.  Limits can be linked to a specific IP address or credit card number. Additional features allow for limits to be set for the number of credit card numbers that can be used. This eliminates criminals from testing cards for approval. Once your specific rules have been configured you can set the system to flag the transactions for review of decline them immediately.

Merchant defined user bans

In addition to dynamic transaction review, static user bans are effective at eliminating known threats. For example if your business is experiencing repeated fraud attempts from a single IP address or band of IP addresses you are able to configure a specific rule to eliminate the threat. You are also able to ban specific credit cards numbers or bank bin numbers to eliminate credit cards from a suspicious bank. Known problematic geographic regions can also be banned. 

Merchant defined exceptions

With any good fraud detection solution there will always be exceptions to the rules you establish. A proper fraud management solution should allow for specific overrides to be defined making sure legitimate customers are not prevented from a successful purchase.

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Tags: Online Fraud Protection, Merchant Account Fraud, Fraud Reduction