Magazine article Business Credit

Credit Card Fraud: Q&A

Magazine article Business Credit

Credit Card Fraud: Q&A

Article excerpt

In the following Q&A, we answer questions posed to us by clients and industry peers who have been challenged by the complexity of credit card fraud risk management. Topic areas highlight this complexity at both the industry and organizational level. Verifraud's front-line experience and extensive research provide insight into perpetrator behavior, organizational response and the industry ecosystem that has emerged to combat the threat. The following questions and answers address these areas.

Q: What do you find most interesting about credit card fraud prevention?

GB: To me, it's like an intense chess match against an unseen opponent on a moving surface. I've found it to be an incredibly complex discipline in that one must delicately balance all of the competing organizational objectives. When you're involved in a cat-and-mouse game such as this, it's easy to lose perspective but operating with tunnel vision will kill you. It's also easy to want to rely on subjective intuition rather than really looking at the numbers and statistics to see if this intuition is supported by the data.

Q: What are the main challenges for businesses today in terms of credit card fraud prevention?

GB: That same balance. Failure to consider all of the variables involved is one of the most common mistakes that I have seen over the years. I think bringing in good people with broad business knowledge is the best way around this. In the case of the smaller business, this can take the form of turning to industry experts even if only periodically.

Q: What do you think is the most overlooked part of the equation?

GB: That really depends on what segment of the industry you are looking at. In general, I think that one of the more common mistakes is not focusing enough on internal variables and information. With the threat coming from outside, it's easy to lose sight of all of the internal information and variables that must be considered. It's necessary to design strategies based upon the economics of the firm rather than upon how to stop the next external threat. Such things as thoroughly analyzing historical chargeback data in conjunction with good order data, considering how product margins and the range of product margins come into play, collaborating with other functional areas so that organizational consistency is maintained, etc.

Q: What are the strengths of the prevention industry?

GB: In general terms, I think the strength lies in the open-mindedness and resource commitment shown by most businesses. Media attention on credit card fraud and identity theft has been partially responsible for this fact, though nothing increases open-mindedness like a big loss. …

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