How eCommerce Retailers Can Address the Card-Not-Present Fraud Problem

Card-not-present (CNP) fraud is a significant concern faced by eCommerce retailers. Just as you may feel you have it under control, it evolves, and new risks emerge. In this article, learn how online retailers can address the CNP fraud problem.

Card-not-present (CNP) fraud has risen sharply since the eCommerce boom triggered by the COVID-19 pandemic. Chances are good, if you're an eCommerce retailer you've felt the impact of fraud hit your business in the last few years. 

Retailers and credit card providers alike are looking for new ways to defend against the threat of CNP fraud, but with varying success. Fortunately, eCommerce fraud prevention solutions are making it easier to handle cases of CNP fraud for online retailers. 

Today, we're going to take an in-depth look at the CNP fraud dilemma. We'll start by covering the definition of card-not-present fraud. Next, we'll follow up with ways you can reduce the negative effect it has on your business.

What Is Card-Not-Present Fraud?

Card-not-present fraud is a malicious form of credit card fraud. Most eCommerce business owners consider it a credit card scam. This particular type of fraud takes place when a physical card is not present during a transaction.

Most of the time, CNP fraud occurs through online payment platforms. This is the crux of the whole CNP dilemma. eCommerce fraud attacks are much more difficult to identify and detect compared to card-present fraud.

The Card-Not-Present Fraud Dilemma

As we mentioned before, CNP fraud can be hard to determine; but the dilemma of CNP fraud goes deeper than that. Many times, victims don't even know they've been hit by a case of CNP fraud.

All a criminal needs to commit CNP fraud is credit card information. Most online payment platforms don't ask for more than that. 

Today, hackers can get very creative when it comes to getting this information. The most popular ways are skimming, phishing, and traditional hacking.

We're familiar with traditional computer hacking. What you may not be familiar with, however, is phishing and skimming.

Skimming is when criminals use a fake payment processing device to gather credit card information from customers. Self-service gas station terminals are a popular spot for this type of fraud scheme.

Phishing involves the use of your personal email. Hackers will send emails claiming to be from websites you are already registered with. An example is PayPal. When you open the email you'll be prompted to click a link or download a file. 

By clicking or downloading, you're giving the hacker access to your private information that they can then use to make illegal purchases.

What's The Solution to Card-Not-Present Fraud?

The most effective way to fight back against the threat of CNP fraud is to invest in a fraud solution that provides a reimbursement guarantee on fraudulent transactions. There's no way to truly stop every fraudulent charge that comes through, which is why it's critical that you have a fraud prevention partner that can assume that liability that comes with approving a potentially risky order. 

Vesta's fraud prevention platform is aimed at bringing fraud costs down to zero. Our proprietary and adaptive graph database draws connections in real-time to approve more than 97% of transactions, leading to a 10-20% average lift in revenue.

A critical component of Vesta's magic is focusing on approving legitimate transactions, and not only denying fraudulent transactions. It’s table-stakes to stop the bad guys - but much more nuanced (and expensive) to approve difficult-to-assess yet still legitimate purchases.

We can guarantee that our platform will make CNP fraud easier to spot for your eCommerce business.

For more information about what Vesta can provide your business, request a demo today.