nicolas vedrenne, payment fraud
TRANSCRIPT
Payment Fraud
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE MOSCOW, JUNE 4-5, 2015
About the MRC
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 2
About the MRC
• For ePayment and eFraud• Non profit association• Created in 2000 in the US and 2011 in Europe• 400 Merchant companies • 50 Solution Providers
Networking / Education / Bechmarking / Advocacy
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 3
First, let’s do Mathand
get your attention
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 4
Payment Fraud: Business Case 1
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 5
Plane ticket to NY: 1.000€eTravel agent margin : 10€ (1%)If a fraud, then loss is: 1.000€
Travel sector Fraud: 0.29%
Fraud is 29% of profit for Travel
Payment Fraud: Business Case 2
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 6
Fraude for Physical Goods: 0.38%Internal fraud Costs multiplicator: x 2.93Total cost of Fraud:
1.113%
If your marging is: 10%
Fraud is 11.3% of profit for Physical Goods
How much is Fraud
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 7
Payment Fraud: 0.53% in average
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 8
USA BEL FRA DEU CAN GBR NLD AUS ITA ESP0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.80%0.72% 0.71%
0.65%0.58%
0.52%0.46%
0.41% 0.39% 0.38%
0.27%
% of Ecommerce Sales Lost to Fraud in Top 10 Countries
Payment Fraud varies by sector
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 9
Subscription Services
Other Services, excl travel
Digital Goods Physical Goods
Travel / Tickets
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.46%1.04%
0.80%0.42% 0.38% 0.29%
Global Fraud Rate by Merchant Type
Type of Payment Fraud
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 10
Triangulation schemes
Coupon / Discount / Refund abuse
Identity theft
Account takeover
Money laundering
Phishing / pharming / whaling
Clean fraud
0% 10% 20% 30% 40% 50% 60% 70%
4%
5%
9%
11%
13%
18%
28%
7%
6%
14%
13%
10%
12%
17%
8%
2%
15%
19%
8%
15%
7%
Fraud attacks in terms of frequency experienced by merchants
Rank #1Rank #2Rank #3
Organized Fraud vs. Friendly Fraud
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 11
0%
10%
20%
30%
40%
50%
60%
57%
30% 26%15% 6%
27%
How Merchants Determine Friendly Fraud
Friendly Fraud25%
Other75%
% Loss Merchants Believe was “Friendly Fraud”
11
What to do ?
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 12
Multi-layered approach
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 1313
Biometric indicators (e.g. voice recognition)
Two-factor phone authentication
Credit history check
Paid-for public records services
Payer Authentication (3D Secure)
Postal address validation services
Email address validation
Google Maps lookup
Social networking site
Telephone number verification/reverse lookup
AVS
CVN
0% 20% 40% 60% 80% 100%
7%
15%
29%
37%
47%
50%
55%
57%
57%
66%
87%
3%
3%
3%
18%
5%
12%
1%
2%
3%
5%
5%
Currently in use
Plan to add in 12 months
Multi-layered approach
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 1414
Other
Device 'fingerprinting'
IP geolocation information
Multi-merchant purchase velocity/identity morphing models
Shared negative lists - shared hotlists
Customer website visitor behavior analysis
Positive lists
Fraud scoring model - company specific
Order velocity monitoring
Customer order history
Negative lists (in-house lists)
0% 20% 40% 60% 80% 100%
9%
51%
77%
21%
40%
24%
57%
72%
73%
78%
82%
18%
8%
7%
6%
16%
7%
8%
5%
5%
6%
2 Warnings
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 15
Warning 1: False Positive
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 1616
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
2.64%
% Sales Rejected or Denied due to Suspicions of Fraud in Top Country
8%
57%
11%
5%
6%
13%
% of Transactions Rejected for Fraud thought to be False Positives
0%0.1-5%5.1-10%10.1-15%15.1-20%>20%
Warning 1: Abandon Rate
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 1717
1 Reminder
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 18
Remember: Investment is key
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EDAYS INTERNATIONAL E-COMMERCE CONFERENCE MOSCOW, JUNE 4-5, 2015
Exclusivity fore-DAYS attendees:
Let’s keep in touch!
• +34 91 524 7512
• www.merchantriskcouncil.org
EDAYS INTERNATIONAL E-COMMERCE CONFERENCE – MOSCOW, JUNE 4-5, 2015 21