Fraud Prevention Systems

You are here:

Fraud Prevention Systems

Various fraud prevention systems exist, the seven types of systems detailed below offer a summary of the types of systems on the market. Although not an exclusive list, if you a looking to purchase a 3rd party system it is advisable to first make a decision on what type of system you require.

Transaction/Payment verification

These systems enable the processing of credit and debit cards, as a part of the transaction the card details provided are verified.

For card holder present transactions chip and pin is now used to provide an extra level of security, instead of the traditional signature from the card holder which is open to manipulation. Chip and Pin works by the card holder entering a 4-digit pin that is checked against the information stored on the card, (within the chip). If the pin entered matches the stored details, the transaction is permitted.

For card holder not present (CNP) transactions these systems include AVS and CVV checks. The AVS checks ensures that the billing address detailed matches the address registered to the card. The CVV check ensures that the 3 or 4 digit number on the back of the card is linked to the card. Only when the AVS and CVV checks are passed will the transaction be permitted.

Transaction/Payment verification – 3D secure

In addition to AVS and CVV checks an extra level of security can be applied to card holder not present (CNP) transactions. 3D Secure more commonly known as MasterCard SecureCode or Verified by Visa requires users to supply a password which has to be detailed and accepted before the transaction is permitted. If the password given is not accepted the transaction will not be completed.

By using 3D Secure businesses may not be held liable for fraud resulting in the unauthorised use of a credit card.

Data verification

Beyond the checking of data relating to the transaction there are many systems that verify other data provided within a booking or that look to verifying previously checked data in a different way. The majority of these systems focus on the links between a selection of data usually a minimum of three and then gives a confidence score surrounding the links between the sets of information. The links between the data is established by looking at a variety of data sets such as the electoral role. Some systems aim to look at as many data sets as possibly while other systems limit the amount of data but take a more historic look at the data provided.

Unlike Transaction/Payment verification where a booking is accepted or rejected, data verification enables the setting of a minimum benchmark that the confidence score has to reach before a booking is accepted. This benchmark can be amended depending upon the type of booking taking place and the risk level associated with that booking.

Location verification

If data verification is there to check that the card holder is who they say they are, location verification is used to check that the card holder is where they say they are. Throughout a transaction the card holder will provide a selection of a data that gives information relating to where the card is located. Location verification looks at this data and the links between the data and gives a risk score. Again like data verification a minimum benchmark for the risk score can be set and adjusted accordingly.

What is being booked

Aside from the personal and Transaction/Payment data being processed attention can be paid to the type of booking taking place. By looking a previous fraudulent or rejected transactions an organisation can make a risk assessment on all types of booking and those that are regarded as medium or high risk can be given a higher confidence score to pass or be subjected to additional checks such a document verification.

Data sharing

Data sharing usually takes places in conjunction with many of the system highlighted above. Simply data sharing enables a user to say I have been presented with the following information, has any of this information been used in conjunction with fraudulent activity? Data sharing is valuable because a booking can pass all the above checks but still be fraudulent.

The key to data sharing is the amount of data available, the relevance of the data to your business and the extent to which the data provided can be used to make an informed decision. The nature of data sharing tools are that they will confirm if the data given has been detailed by another user of the system as fraudulent.

Document authentication

Such systems enable users to authenticate official document or id`s such as a passport, driving licences and identity cards. The natures of these systems enable users to carry out checks to confirm their authenticity of the specimen.