What to Do When Your Business Is Hit by a Fraud Attack

If you conduct business online, it’s likely a question of when, not if, your business will fall victim to a fraud attack. Will your fraud team instantly recognize small changes to transaction patterns as a precursor to an attack, or will it take a large chargeback for them to realize a large-scale attack occurred?

How Fraud Attacks Can Escalate

Today’s cybercriminals are smart — sometimes smarter than your fraud prevention system. Once they identify a vulnerability, your business is exposed. Word spreads. Fraudsters move in. And the financial damage can be done quickly.

Like ants at a picnic, word about a fraud system’s weakness spreads, and multiply fraudsters may simultaneously attack a business — taking all they can until security closes the security gap. Then they’re off to find the next vulnerable ecommerce business.

When fraudsters are gauging a business’s ecommerce security in preparation for a cyberattack, they may:

• Test the waters. A fraudster may test the validity of a credit card number by placing a single small charge. If that goes through, he knows he has a valid card, paving the way for additional (and larger) fraudulent transactions.
• Place low-cost orders. If transaction tests show the fraudster can’t buy items valued at more than $50, he may instead buy 10 items that cost $5 each.
• Circumvent fraud rules. If your business sells computers, you might set an arbitrary fraud filter rule that flags transactions of computers costing more than $1,000. A cybercriminal’s first transaction, a $1,100 computer, fails. But his second transaction, a $999 computer, goes through. Just like that, the fraudster has identified your fraud threshold, and multiple fraudulent transactions quickly follow.
• Modify orders after they’re placed. After placing an order using with legitimate card-owner data, fraudsters call the business’s customer service center and change the shipping address. Because most companies don’t rescreen changed orders, the fraudulent change is processed.

For ecommerce businesses today, the best defense against cyberattacks is a good offense. Stop attacks before they damage your bottom line and your reputation.

Defending Your Business Against Fraud Attacks

To be successful, fraudsters must fly under your fraud team’s radar. If they can’t, they’ll move on to an easier target.

Let fraudsters know you’re watching for them by employing these preventive measures.

• Don’t rely solely on layering rule-based filters to protect your business. What works today might not work tomorrow, and fraudsters have ways to identify your fraud rules. Instead, employ a multifaceted approach that combines advanced technology, statistical intelligence and sophisticated human analysis.
• Incorporate a strategy that includes chargeback insurance — a 100% guarantee to the merchant against chargeback costs.
• Keep up to date on the latest fraud techniques, fraud management predictions and data breaches.
• Screen every transaction, not just those that are flagged by fraud filters. This lets you analyze fraud patterns and behaviors in groups of online orders.
• Ensure your security system is current; you can’t protect your business with outdated technology.

Successful fraudsters are creative. To prevent fraud attacks, your team must be, too.

Fraudsters take the path of least resistance. If your fraud protection system is doing its job, that path won’t lead to you.

Adding multilayered security to your sales and chargeback insurance can help you eliminate your fraud risk, which means you can concentrate on growing your business, improving your bottom line and building lasting customer relationships. Contact our fraud protection analysts today to learn more.