People doing fraud are organised – and so should you be, a seminar at the Retail Solutions 2006 show heard.
192.com provide online identity and voice verification products, for clients such as online gaming websites, and retailers, and for financial companies for debt collection. Ian Green, corportae sales director at 192.com, began with APACS, that show what he called massive growth in CNP (card not present) fraud. Because of Chip and PIN, that came in in February, customers using their PIN number when paying in a shop, rather than a signature, fraudsters are migrating, doing frauds over the internet or telephone. The real losses to CNP fraud are probably significantly higher, and some retailers are suffering massively, he added.<br><br>He stressed the balancing act for efraud managers and retailers. They have to keep the trust of customers, and protect their brand, and ensure profitability, but what if anti-fraud checks are not sophisticated enough and push away genuine customers? <br><br>It’s a difficult balance, he went on, between asking a customer too many questions and losing people during the transaction process, and having to validate individuals. Age verification applies to gaming companies, for legal compliance reasons. Ian Green suggested that such verification might apply too to ‘sensitive’ products such as knives and alcohol. <br><br>Continuing the idea of a retail balancing act, he spoke of the drive to acquire customers – offering multiple payment options, and speedy delivery – with the need for operational control, to minimise risk. How to go about minimising risk depends; on the type of product sold, the value of an order, the volume, and timetable for delivery. That is, if someone suddenly asks for three plasma screens, the retailer should be suspicious. <br><br>The fraudsters are highly sophisticated, he warned; they will look for weaknesses in a retailer, perhaps taking advantage of the short time it takes to order; or a fraudster will place an order near a distribution centre, so that the fraudster receives the delivery before the retailer has run checks. Nor are the fraudsters brand-sensitive, he claimed. "They are highly persistent," he said. "They do it as a job. You can even see them take lunch breaks from their patterns. They have a huge amount of information available to them, and they are using it every day. There’s a huge challenge for all fraud managers." Who can gather information to validate a customer or unmask the ungenuine ones, and how? Staff including store detectives and people working at tills – in the jargon, ‘at the front end’ – can be trained to look for suspicious behaviour. The 192.com products look to validate such things as name, address and whether the customer is deceased – "it’s amazing, the number of dead people that try to buy plasma screens," Ian Green said, meaning that fraudsters steal the identity of someone dead. Anti-fraud products available include IP-geomonitoring, etokens, device-checking (a check on the comptuer used to send the order electronically), possible biometrics such as voice recognition, and proprietary risk and fraud engines (computer software). <br><br>Finally, Ian Green urged retailers to work as a sector, to maximise experience of fraud, that all retailers suffer from.
He said: "If the fraudsters are organised, then we need to be too. Retailers insist they haven’t got a fraud problem – nobody seems to have – but eventually they admit they have a problem, like everybody else. I think there has been a reluctance to share information. But we rae seeing a move – and it has been driven by some major retailers – to get together in a closed environment, to work together, share information and talk about specific issues, and put on a united front when dealing with law enforcement."
Retailers, he added, have had huge difficulties in terms of how to approach law enforcers – that is, where does a retailer report a fraud to? where it happened, geographically? or where the retailer’s head office is? 192.com is running its own forums, he said, and has gone online, so that in a secure environment retailers can alert each other to attacks. Such information is about generic issues. Such work as an industry is incredibly important, he concluded, because if a retailer pushes away a fraudster from its website, the fraudster will come back.
