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Fraud Check System for Online Merchants

Ethoca : 19 May, 2010  (New Product)
Online retailers can now benefit from eCheck Fraud Solution from Ethoca for the prevention of Check21 and ACH Fraud
Ethoca has released Ethoca360 eCheck Fraud Solution, a service online retailers use to safely accept direct electronic payments from customers' checking accounts while preventing Check21 and ACH fraud. Merchants can download a free eCheck Fraud Solution product sheet from the Ethoca web site.

"Impulse services and high-value goods can be very lucrative for online merchants, but you don't want a small number of bad apples to cost you all your profits, and it's very hard to tell the fraudsters from the legitimate customers," said Andre Edelbrock, Chief Executive Officer and Co-Founder of Ethoca. "In businesses where a service is rendered immediately upon payment, for example, you can't get back the cost of the service if the account drawn from was being used fraudulently, doesn't exist, or has insufficient funds. The same is true if the buyer is the holder of the account, but never intended to honor the purchase agreement, and stops payment or claims they didn't receive the product or service."

E-commerce websites benefit from offering to accept electronic payments that rely on ACH and Check21. Fearing identity theft or card fraud -- or simply as a means of keeping track of what they spend - many online shoppers prefer to pay by check even if they have a credit card. In fact, according to NACHA-The Electronic Payments Association:

- 89% of US adults have a checking account
- 45% of credit card holders are within 5% of limit
- 80% of non-cash payment is made by check
- 10 million households without credit cards are online

The Global Fraud Alliance network, powered by Ethoca, enables broad, automated industry collaboration by merchants, payment processors, fraud solution vendors, issuers and banks. With eCheck, data in the GFA repository is one of the factors contributing to the merchant's risk score. So he or she knows whether a transaction is linked to confirmed fraud or other high risk indicators.

Many factors go into the real-time decision. One of the most important is uniquely available from Ethoca: knowledge gleaned from the Global Fraud Alliance (GFA) repository of historical credit card, eCheck and alternative payment experiences and outcomes. Over 500 million merchant and payment provider contributed records containing rich transaction information and outcomes across various payment types are in this rapidly growing database. Data can be linked by any attribute, offering a 360 degree view of behavioral patterns online that help identify both good and bad orders and customers.

To generate a merchant's risk score and/or order recommendation for the eCheck transaction, this data is cross-matched and combined with several other factors including, but not limited to:

- Blacklists - links to comprised data, blacklisted by merchants or payment providers
- Bank account standing - open, closed, in good standing, return history, business account
- Negative check databases - check past returns and related information
- Authentication risk - identity information matched with leading identity databases
- Velocities - dramatic or suspicious changes in usage patterns
- Data inconsistencies - flags suspicious information based on historical experiences
- Geo-location - high risk source IP address, inconsistencies with IP, bank location and address
- Regulatory - flags individuals on Specially Designated Nationals (SDN) or Blocked Persons (e.g., OFAC) lists

Most online retailers accept multiple payment types. Ethoca provides a suite of industry-leading fraud prevention services for card-not-present transactions. The Ethoca360 Fraud Detection family of services includes:

- Ethoca360 eCheck
- Ethoca360 NEGATIVE SIGNALS
- Ethoca360 SIGNALS
- Ethoca360 SE

According to the website NACHA.org, ACH payment volume continues to double every five years. A recent Federal Reserve Payments Study revealed ACH payments had the largest compound annual growth rate (18.6 percent) of all US non-cash payments.

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