Plenty of consumers do this: They start to order a product online, reach the checkout point and then realize they have a question or a problem. So they call customer support to resolve the issue and complete the order by phone with a credit card.
A number of criminals follow the same procedure, thinking—often correctly— that they are less trackable if they don’t complete a fraudulent purchase online, says Noam Inbar, vice president of business development at Forter, a fraud prevention technology provider. That trend in what is known as card-not-present, or CNP, fraud is likely to increase as new technology makes it more difficult to commit fraud in person.
Forter has developed and released new software for detecting fraud on phone orders that begin on a website. The company’s Decision-as-a-Service system for phone orders acts much like its e-commerce fraud tools, relying on behavioral analysis—where consumers hover on a website, the duration of their site session and how long they take to check out—to make real-time decisions on whether to approve or deny card-not-present transactions. If a merchant gets ripped off while using the company’s product, Forter assumes full liability for the transaction, Inbar says.
A customer service representative taking a phone call for an e-retailer can see a customer’s unique ID number assigned by the retailer’s security systems and connected to Forter’s system to get an instant response indicating if the order is fraudulent or not, she says. Customers are not put on hold while the service representative does a manual check or confers with a supervisor, and customers do not have to respond to a text or email message to verify their identity.
“These customer service representatives have no good tools. All they have is the voice, and there’s no way to ID the fraud,” Inbar says. “With Forter you don’t need manual reviews. Within a few milliseconds an online retailer will get a real-time accept or decline decision. The challenge there is preventing fraud while still keeping a good user experience.”
Forter developed the process in the past year and tested it with web-only luxury watch and accessories retailer Jomashop.com, based in Brooklyn, N.Y.
“We worked together with Forter to lead the users through a flow that is frictionless for them but at the same time efficient for us in terms of operational execution on the back end, ease of use for our customer support representatives and most importantly—gets the job done when it comes to reducing fraud rates substantially. The phone orders channel didn’t have any real-time solution up until this point and the results we have seen with this beta are very promising,” says Osher Karnowsky, general manager of Jomashop.com, No. 203 in the newly released Internet Retailer 2015 Top 500 Guide.
Some security experts predict online fraud and other forms of card-not-present fraud will rise as U.S. banks and merchants shift to chip-and-PIN-based credit and debit cards that make it harder to commit fraud in physical stores. . Over the past decade or so, the introduction of such chips cards in Europe and Canada has brought down face-to-face fraud and led criminals to focus more on defrauding web merchants.