One of the more challenging issues we have to work around involves new vendors. While we do have a wealth of knowledge and experience relating to the various types of fraud, it can prove somewhat more problematic to link this knowledge with a new vendor. First, we must understand our vendor and the aspects of their business that may be at risk of fraudulent activity.
Types of customers and fraud:
With all new vendors, we must start from the ground up. From the moment our partnership begins, we attempt to assess what types of customers our vendors will be receiving. For the purpose of this study, we reviewed one of our new vendors and will now refer to them as “Supplier A“. In the case of Supplier A, several discrepancies were located in each order placed through their system. We noticed discrepancies between the billing information and the IP addresses, as well as discrepancies within our internal tools. While not unusual to find orders with these types of discrepancies, we did find that each new order placed had very similar discrepancies. This made it appear that the same person or group was attempting to circumvent the fraud review process and get by undetected. When we noticed such a large percent of Supplier A’s orders with these same discrepancies we then proceeded to take a higher level of caution with all new orders reviewed. It appeared that the trends changed slightly, receiving orders with matching billing addresses and IP addresses but suspicious email addresses as well as substantial and consistent discrepancies within our internal tools. This may have been the work of the same person or fraud ring placing the original orders, but it is also possible that the vendor was being hit by other fraudsters.
Fraud types and the likelihood of fraudulent activity:
Supplier A is providing a virtual private network or VPN service. A VPN service is both an intangible service and easily accessed long before the legitimate cardholder is likely to notice this fraudulent transaction, making this service a prime target for fraudsters. Knowing that this service is highly likely to attract fraudulent activity, we will be more prepared and inclined to contact the customers to provide a more in-depth review of the customer before reaching a conclusion.
Friendly fraud:
Unfortunately, everyone is at risk of friendly fraud. A VPN service, however, is less likely to receive this type of fraud than a vendor providing a product or service of a more personal nature such as dating or adult products. Friendly fraud is also the most difficult type of fraud to catch, as the correct information is generally listed on the order. The customer is more likely to report this as fraud if they do not recall the purchase or issuing a charge back instead of requesting a refund. Suppliers should keep records of the order, communicate with the customer, and save any other pertinent information to aid in disputing these charges when the time comes.
How can we minimize the risk to the vendor and the overall results?
The best advice that we can offer to any vendor is to be proactive with their own orders. Review any order, even briefly, to look for discrepancies listed on the vendor page or the information listed within their own system that we may not be able to access. If a vendor is suspicious of an order due to the discrepancies they find, or for any other reason, we encourage them to research it further. One of the most readily available tools around is the internet, and there are several helpful tools that are free for anyone to use. Google maps will help you know if the address listed is a home, business, or even an empty field thanks to the satellite images. The directions feature is also quite useful, letting you plot the distance between the billing address and the IP location. An IP location 500 miles away from the billing address tends to be a bit more suspicious than one within 50 miles. Another useful tool is whois domain tools this lets you check where an IP is coming from or search on an email domain to find out additional details. Is this an established business that has been around for years, or was the domain just created recently to appear legitimate? There are countless tools available to anyone if they wish to search for information about a customer. Our vendors are also more than welcome to contact us by emailing fraud@2co.com through our ticket system or by calling 877-294-0273 to express concern. We will take an additional look into the order with any new information provided. Once a vendor is aware of the types of fraud that they receive, they are more likely to understand and locate the types of fraud that they may be getting.
The world of fraud is ever changing and while we would like to say that we can prevent every instance of fraud, this is unfortunately not the case. Only by working together will we be able to provide the most effective protection.
Mike and JR – Fraud Department
