The online doorway to world trade is wide open, and the potential rewards are huge. But when e-tailers invite foreign customers over the threshold, e-commerce expert Carl Clump warns they can also be putting out the welcome mat for fraudsters

The online doorway to world trade is wide open, and the potential rewards are huge. But when e-tailers invite foreign customers over the threshold, e-commerce expert Carl Clump warns they can also be putting out the welcome mat for fraudsters

Businesses using the internet as the gateway to sell their wares in new countries are discovering that card fraud is a cross-border crime, said Carl Clump, e-commerce expert and chief executive of payment fraud prevention and payment processing provider, Retail Decisions (ReD).

Conmen using stolen or cloned cards work differently across sectors and nations, which he said means that the fraud prevention strategies that work in one country can be ineffective in another.

Retail thieves target different goods in each country, based on demand, how quickly they can re-sell the item and how much it can fetch, Clump added. Scam trends also travel fast. So a fraud prevention system that only looks for patterns detected in one geographic location, will miss crucial methods of attack being used in other parts of the globe, he warned.

Protecting a global presence

“Retailers can’t extrapolate fraud trends from one part of the world to another because there are differences in how criminals perpetrate fraud from country to country, and some of those differences are quite subtle,” said Clump.

A global overview of the ploys and tricks emerging across the planet, not just those on the doorstep, is therefore crucial in thwarting card fraud.

Clump continues: “In China, virtual characters that are created to play online games such as World of Warcraft are very popular with fraudsters and consumers alike. While criminals in Europe and North America prefer to focus on physical goods like gift cards, smartphones or the iPad – products in high demand that can be quickly re-sold, maximising the criminal’s profit.”

Just as trends vary from country to country, so do the annual fraud levels that ReD constantly monitors. Statistics show that online payment fraud in the UK was down 10% to £239 million in 2010, compared with 2009. In stark contrast, the US experienced a 157% rise from 2009 in attempted payment fraud, with the figure soaring to $ 5.8 billion in 2010.

Pooling extensive resources

Given the variations in fraud patterns between countries, e-tailers selling across borders need a partner that is not just up to speed, but ahead of the game when it comes to the latest scams emerging globally across a wide variety of merchant categories. A fraud prevention provider that has access to a database of information pooled from every corner of the world and all types of business – encompassing retail, travel, telecommunications, banking and the petroleum industries – will provide retailers with a deeper insight into fraud trends, and therefore the most effective protection.

“E-commerce businesses that only focus on fraud in their own sector will not immediately spot a new ploy that criminals have used in another industry,” warned Clump. “The narrower the retailer’s perspective of fraud, the harder it becomes to keep pace with rapidly changing fraud techniques.”

Companies such as ReD use its extensive knowledge gained from working with some of the world’s biggest retailers to fight the high rates of card-not-present transaction fraud head on, he said. ReD alone screens around 19 billion transactions worldwide. With such a large number of transactions being processed each year, it is vital for companies to remain at the cutting edge of advances in screening technology.

ReD has found that many companies are reluctant to expand their business overseas because of concerns about fraud. “But with the right protective shield, one that is both multi-dimensional and with a broad global perspective, e-tailers can get the reassurance they need to throw their business net wider – and so maximise their potential,” concluded Clump.