Ecommerce Guide

200% Increase In Card Testing Fraud

A new report from Radial, the leading omni channel solutions provider has revealed that in the first quarter of 2017, there has been a 200% increase in credit card testing. This is a common technique amongst fraudsters that see them test stolen credit card numbers with small purchases that gradually increase, before making large purchases using the card.As a fraud technique, it is relatively unsophisticated but one that many retailers are not prepared for.

The figures for all types of fraud are up 30% which shows that retailers are simply not getting to grips with fraud, often because of their fear of using valuable revenue. Many retailers fail to implement fraud prevention and detection at all or do so in ways that are substandard, and this can lead to a decrease in the customer’s experience that ultimately leads to a loss in revenue.

Commenting on the report, Stefan Weitz, chief product and strategy officer at Radial says:

“Our data adds another alarming statistic for retailers who may be unprepared to manage fraud activity in e-commerce. We know fraudsters won’t stop looking for opportunities to monetize their stolen data and will even automate this process once they have a card that appears to be working. This results in quick, large volume purchases that leave retailers vulnerable. When retailers miss card testing, they’re contributing to future card attacks. Fighting card testing is complicated, but can stop millions of unanticipated fraud attacks if tracked and managed efficiently.”

Online retail is growing at a significant rate year-on-year. Figures published by Smart Insights from eMarketer about retail ecommerce sales worldwide show that retail ecommerce will be worth $2.352 trillion this year and will rise to $2.860 trillion in 2018, $3.418 trillion in 2019 and $4.058 trillion in 2020. As online retail grows, so does the opportunity for fraud, and it is crucial that online retailers protect themselves from scams such as future card testing fraud.

Speaking about the report to the PYMTS website, Michael Graff who works at Radial as their Risk Analytics Manager advised how to best combat future card testing fraud:

“There are two key components to a Card Testing Prevention strategy: detection and response. First, retailers must have the sensors or monitoring in place to recognize when a situation like card testing is happening. If the testing is found weeks later in a system or financial audit, it’s too late — the damage has been done. Second, retailers need to have proactive ways of restricting the activity. Your system should be configurable to recognize common data points as velocity attacks, or at the very least allow a manual response where the use of this data can be restricted.”

With the prospect of online retail fraud growing as well as online retail being increasingly competitive with emerging economies particularly growing strong, fraud protection is going to become a vital part of every retailer’s strategy.

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Scott Bretton

Scott Bretton

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