This story is the focus of BBC news reports today. The investigation was supported by the 3rd Man’s fraud experts (contact details in the editor’s notes)
Retailers fighting against an ever increasing threat of card crime
Credit card fraud protection specialist, The 3rd Man, says that ‘card not present’ crime in the UK is far higher than official statistics suggest1 and is getting worse. Over £500 million of fraud was attempted during 2007.
This alarming figure shows that the appetite among fraudsters around the world to use the Internet for crime among UK retailers has far from diminished, and comes at a time when retailers need every penny of revenue they can get to cope with the effects of the global credit crunch.
“Card not present fraud is a major problem which is not going away and clearly is getting worse as criminals increase their efforts to steal from retailers,” explains Paul Simms, CEO of the 3rd Man Group. “We aren’t just talking about petty thieves and opportunists here. This money also funds illegal drugs, organised crime and terrorism.”
Retailers have become a soft target for fraudsters, although the introduction of Chip and PIN dealt a massive blow to criminals. Changing their focus to ‘card not present’ fraud, where the buyer does not have to be physically present at the point of transaction (such as Internet and Mail Order shopping), fraudsters have evolved their techniques to con retailers out of millions of pounds.
However, many responsible retailers are now fighting back by using behavioural data screening techniques and by sharing their data through initiatives such as SuperSearch which scans millions of ‘live’ transactions for retailers each month.
“Behavioural analysis detects around 80% of all attempted frauds, but retailers can be stung by exactly the same fraud committed with another retailer. By sharing their data they are protecting each other and in doing so will already save over £100 million in 2008,” says Simms. “But more can be done. We have a real opportunity to get on top of this problem through managed collaboration, involving retailers, consumers and the banks.”
Shared databases contain clearly fraudulent and highly suspicious data, including listings of bad or questionable details such as email addresses, delivery addresses, phone numbers, IP addresses and card numbers.
Shared databases are not restricted to retailers as banks can also integrate their systems with services such as SuperSearch. “When fraud is detected a data feed is sent to the respective bank informing them that their cardholder has had details compromised,” explains Simms. “They can then act to re-issue the account number and possibly block the card. In the same way the banking community succeeded with Chip and PIN, this is another major way to protect retailers from card not present fraud.”
1APACS reported that CNP fraud in 2007 was £290.5 million, an increase of 37% on 2006. This was the figure on UK issued cards only and excludes losses on non UK issued cards.
The 3rd Man’s SuperSearch service stopped £33 million in 2007 in shared data alone. Shared data is important and detects around 20% of frauds already. This figure will increase as more retailers join shared data schemes.
Tel: 01483 811234 / 07812 766338
The 3rd Man
Tel: 01276 856444
The 3rd Man
Tel: 0870 874 4999
About The 3rd Man Group - www.the3rdman.co.uk
The 3rd Man provides card not present fraud screening, card fraud analysis and consultancy services to some of the UK’s leading retailers, including Argos, Halfords, Woolworths and Ticketmaster.
The 3rd Man reliably detects in excess of 95% of fraudulent attempts including organised and casual fraud.
The 3rd Man also provides its GateKeeper secure online data reporting and analysis tool that enables clients to search for and display transactional information instantly, performing complex analysis to identify fraud rings quickly.
Sharing data - SuperSearch
SuperSearch is a screening service which is used by retailers throughout the UK. It works by providing retailers and banks in any location with a reciprocal connection to fraud screening services. When a transaction is rejected because an attempted fraud is detected, details provided by the suspected fraudster are made available anonymously to all users. Retailers and banks may then take action to prevent further incidences of fraud, not just in the UK but worldwide.
The service works by enabling retailers to share information about fraudulent activity. This information is available to banks upon their application.
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