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News

Travel companiestest fall short of payment card fraud prevention requirements

41st Parameter : 20 August, 2009  (Technical Article)
Webinar survey reveals the number of travel organisations that have inadequate fraud prevention systems in place to combat fraudulent card not present transactions
During a recent webinar hosted by Continental Airlines, one of 41st Parameter's clients, when asked how many different rules were built into their solutions to track fraudulent transactions, half of the participants admitted to having systems with only 25 rules or less to flag fraudulent incidents, with a further 17 per cent using under 200 - woefully inadequate algorithms by current standards!

It is therefore not surprising that Card-Not-Present (CNP) fraud has continued to rise last year with the amount scammed by fraudsters topping £328m - more than half of the total card fraud losses (£609.9m) recorded last year in the UK, according to APACS.

Ori Eisen, Founder and Chief Innovations Officer of 41st Parameter, the leading provider of Internet fraud intervention and detection services and technology, argues that:

'Although Chip and PIN and secure online payment systems like MasterCard Secure and Verified by VISA are useful tools in combating fraud, it is evident that there are still gaping flaws in current anti-fraud solutions currently in place - and predominantly with the number of rules used to flag fraud. Any anti-fraud algorithm should consist of 400+ rules in order to combat fraud efficiently. The standard fraud checks like Address Verification (does the street number, name, city, postal code, phone, etc match?), Card Verification Value (CVV2) match, shipping address and so on are just the tip of the iceberg. Organisations need more intelligent and intrinsic parameters, such as velocity that shows if multiple orders have been placed in a short period of time. We reckon that to effectively combat CNP fraud, you need at least 400+ rules.

'At 41st Parameter, the rules we create get down to the real hard-to-find correlations that even the fraudsters may not know we can detect by using their device intelligence and the data they enter during the transaction. This is what sets 41st Parameter apart from a black box that just filters for bad orders.'

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