Fighting payment security fraud

On the frontlines of fraud

The Serious Fraud Office (SFO) defines fraud as ‘an act of deception intended for personal gain or to cause a loss to another party’. If your business accepts card payments, it’s a very real issue you must be vigilant about.

We’re committed to supporting our clients with practical advice and industry-leading services to reduce the risk of fraud. To help you stay on the front foot, we’ve gathered the latest information on the most common types of fraud and the simple steps you can take to protect your business.  

The state of fraud today

Fraud is always going to be a big issue for merchants who take card payments. With the rapid development of new payment channels and consumer-led advances, particularly online, fraud management and security can sometimes be a step behind. This lag has opened up more opportunities for criminals to commit fraud.

Today’s fraud is cleaner, more sophisticated and almost undetectable. Fraudsters obtain the cardholder information required to penetrate payment systems and disguise themselves as genuine customers. These orders appear clean in your system, with nothing suspicious on the surface, typically looking like 99% of your everyday, legitimate orders.

The social media revolution is also changing the rules of engagement, with businesses now facing even more risks. This is exposing them to reputational damage from negative interactions and the potential disclosure of sensitive information.

But the industry is not just sitting back and has introduced a comprehensive range of industry initiatives, including:

  •  the roll-out of updated chip and PIN cards in the UK and abroad, particularly in North America
  •  raising retailer awareness of how to protect themselves from attack using Fraud Screening solutions such as ReD or Cybersource
  •  greater sign-up of 3-D Secure services such as MasterCard SecureCode and Verified by Visa
  •  greater use of fraud detection tools by banks and retailers
With scheme-wide initiatives working to give businesses better protection for card payments, fraudsters have shifted their attention to other payment methods such as ecommerce, mail order and telephone orders (MOTO) fraud.

Continuing the fight

Fraud losses on UK cards continue to increase year on year.

These trends owe much to the use of deception crimes, as well as the use of online attacks, such as malware and data hacks, to compromise card details. In response, the industry has redoubled its efforts to warn consumers and online businesses to install security software, often freely available from a customer’s own bank. To prevent stolen card details being used to make purchases online, retailers are advised to take steps to improve their security, including use of online protection services (including American Express’ ‘Safe Key’, ‘Verified by Visa’ and MasterCard’s ‘SecureCode’).