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CHARACTERISTICS OF A SUCCESSFUL PAYMENT METHOD: SECURITY
Promotional Abuse Merchants offer promotions with the intention of encouraging consumers to make purchases. The types of promotions are dependent on the type of merchant and can range from receiving a gift card when a certain amount is spent to a discounted menu item for a limited time at your favorite restaurant. While incentives do matter and promotions bring in new and returning customers, fraudsters also flock to the scene. Many streaming services offer deals like one month free for new users, but this can be abused by users creating multiple fake emails to open new accounts and reuse the promotional offer. Merchants sometimes offer promotions where a customer will receive a gift card when a certain dollar amount is spent or item bought; if not executed properly, fraudsters are able to make the purchase, receive the gift card, and return the item while keeping the gift card. In general, merchants need to be aware of the balance between offering enticing promotions with the amount of abuse they are willing to tolerate within the program. Merchants may wish to set measures for acceptable performance: a business should not be scared to run promotions, but they should be mindful of exploitation. Marketplace Fraud Merchants who do not engage in a marketplace environment are concerned only with fraudulent consumer behavior. When a merchant chooses to operate as a marketplace – whether as the main service or an additional branch to increase traffic on their domain – the risk of fraud increases. Fraudsters can now present themselves as either a buyer or a seller. Posing as a seller, a fraudster can convince a buyer to pay using a platform outside of the marketplace, claiming there would be reduced or fewer fees involved, and never send the promised good.
Fraud Education “Fraud educational conferences, institutions and the like have expanded from historically focusing on traditional fraud schemes like accounting or check fraud to now include all of the categories we’ve outlined in this document, and the number of methods seems to only grow with time. Fraud prevention professionals are also very eager to innovate and evaluate new and emerging technologies. With the sophistication of artificial intelligence and machine learning technologies, we see fraud prevention itself evolving at a rapid rate. This means companies and teams that work in fraud prevention also need to be willing to move at a rapid pace to meet the bad actors where they are with the sophistication and technologies that they employ to gain even footing.”
JUSTIN STASKIEWICZ | DIRECTOR OF CONSULTING, FRAUD SOLUTIONS, CMSPI
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