Ethoca Study Shows Patterns in Online Payment Fraud Attack Speed and Cross-Industry Targeting
Posted on Fri, Jan 28, 2011 @ 05:00 AM
In 10% of 25k online payments fraud cases studied, 1 stolen credit card was used for fraud at more than 1 internet retailer. Download the study |
Ecommerce merchants detect and prevent more online credit card fraud if they share data in real time, say study co-authors
Ethoca, the leader in collaborative ecommerce fraud management, has released findings from a study of 25,188 confirmed fraud cases involving 95 top ecommerce retailers over a five-month period. The study, Fraud Attacks Across Industries, reveals the frequency with which fraudsters strike multiple merchants, the speed at which fraudsters change attack paths, and surprising information on which industries are key targets. The report is available for download at ethoca.com/crosstalk.
Ethoca engaged in a program with credit card issuers and participating online merchants. The 95 merchants studied in this program represent 61% of the top 500 Internet merchants as measured by revenue and as defined by Internet Retailer for 2009. All the merchants were enrolled in Ethoca’s Issuer Confirmed Fraud Alerts™ service from June 2010 through October 2010.
Study highlights
- In 10% of the cases studied, a single credit card was identified used to commit fraud at more than one merchant.
- When a fraudster commits fraud at multiple ecommerce merchants, the victimized merchants do not typically all belong to the same industry or vertical.
- In 86% of the cases studied, the fraudster stopped using the same cards during the first 24 hours.
“One finding is that a merchant’s industry is not an important factor in data sharing,” said Julie Fergerson, Vice President of Emerging Technologies at Ethoca and co-author of the report. “Fraudsters usually do not stick to one industry during an attack. In fact, almost three quarters of the time the fraud attack hit merchants in multiple categories.
"The general belief among online merchants and fraud fighters had been that sharing among industry peers mattered a great deal. The study shows that’s wrong. It is more effective to share data outside an industry.”
“Our research shows not only the importance of sharing data, but how quickly it needs to be shared in order to be effective, and what kind of difference it makes to share it across industries,” said Dr. Daniele Micci-Barreca, co-author of the report. Dr. Micci-Barreca, a principal at Elite Analytics, is a leading expert in fraud detection applications of pattern recognition and data mining technologies.
“Merchants who share data should do so in real-time or near real-time. With speed, digital goods and services can be shut down before the thief is able to get or use them.”
Using Ethoca’s fraud detection services, online merchants cut card not present fraud losses, cut manual reviews, and prevent lost sales to good customers. Over 125 top brands are using an Ethoca fraud management service, including 17 of the top 20 ecommerce retailers as ranked by Internet Retailer magazine. Issuer Confirmed Fraud Alerts™ is ideal for an online merchant wanting to prevent chargebacks and their associated costs. Ethoca360 Signals™ enhances existing card not present fraud screening with payment experiences from other merchants. Ethoca360SE™ is ideal for the online merchant looking for a decision on which CNP transactions to accept, reject, or review. And Ethoca360 eCheck™ is ideal for merchants accepting ACH transactions who want to prevent returned transactions.
Using Ethoca's services, banks and card issuers can easily alert merchants whenever they have confirmed that a credit card has been used fraudulently. That way, merchants can cancel the orders and prevent fraudsters from profiting from their crimes and issuers reduce 3DSecure losses, reduce fraud management costs, and lower chargeback submission costs.
Ethoca partners with top companies worldwide including payment processors, fraud prevention vendors, identity solution providers, card acquirers, resellers and industry organizations. Ethoca’s offerings complement their existing fraud systems, adding unique data they can't get any other way to sharpen fraud screening accuracy.
About Elite Analytics
Elite Analytics LLC is a consulting firm focused on data mining, business intelligence, and strategic consulting services that enable organizations to use their data to make better business decisions. More at eliteanalytics.com
About Ethoca
Ethoca’s mission is to eliminate ecommerce fraud. Ethoca provides fraud management services to card-not-present merchants (those receiving orders by website, catalog, or telephone) and helps card issuers reduce 3Dsecure losses, reduce fraud management costs, and lower chargeback submission costs. Ethoca partners with payment processors, fraud prevention vendors, identity solution providers, card acquirers, resellers and industry organizations. More at ethoca.com