Mitigating Fraud: How DEMAND Helps Monitor and Proactively Protect Businesses
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In the digital era, fraud is one of the most critical challenges businesses face. From identity theft to financial scams, companies must constantly battle evolving threats. Failing to address these threats can result in significant financial losses, damage to a company’s reputation, and even legal consequences. That's where robust fraud mitigation strategies and DEMAND come into play.
Understanding the Scope of Fraud
Fraud isn't a new challenge, but the methods and techniques used by fraudsters are evolving rapidly to target merchants. Today, fraud encompasses a range of deceptive activities, including:
Carding (A Common and Prevalent Threat) - Fraudsters frequently employ carding techniques, testing extensive lists of stolen credit card numbers across various websites to identify those that are valid. The consequences of such attacks can be severe. Without immediate preventative action, businesses risk having their merchant accounts disabled by VISA, potentially resulting in significant revenue loss, particularly during high-traffic periods. Account suspensions can take up to 72 hours to resolve, leading to further disruption and financial impact.
Account Takeover (ATO) - In this technique, fraudsters gain access to legitimate customer accounts by obtaining login credentials through phishing, credential stuffing (using leaked credentials from other sites), or social engineering. Once they have control of an account, they can make fraudulent purchases, change account details, withdraw stored credits, or even add a scraping script to a checkout to send credit card and customer data to a third-party source.
Synthetic Identity Fraud - This involves the creation of fake identities by combining real data (like a valid Social Security number) with fabricated details (such as a fake name or birthdate). Fraudsters use these synthetic identities to open new accounts or apply for credit, then rack up charges without intention to repay, leaving merchants with significant losses.
Chargeback Fraud (Friendly Fraud) - In this scheme, a customer purchases goods or services and then disputes the transaction with their credit card issuer, claiming they didn’t receive the product or that the transaction was unauthorized. This forces merchants to issue a refund, even though the customer may have legitimately received the product. Chargeback fraud is often hard to dispute and results in both financial loss and chargeback fees for merchants.
Refund Fraud - Fraudsters exploit merchants’ return and refund policies. They may purchase items using stolen payment methods and request a refund to a different account or manipulate shipping information to claim that an item was not received, demanding a refund while keeping the product. Some fraudsters even return counterfeit goods or products that they did not originally purchase.
Triangulation Fraud - This is a complex fraud method where a fraudster sets up a fake online storefront offering popular products at a discount. When an unsuspecting customer makes a purchase, the fraudster buys the item from a legitimate site using stolen credit card details and ships it to the customer. The legitimate merchant processes the order, but when the real cardholder disputes the charge, the merchant bears the loss.
Bot Attacks - Automated bots are used by fraudsters to scrape websites for price and inventory data, launch brute force attacks on login forms, and execute credential stuffing attacks. Bots can also perform large-scale card testing, where they attempt to make small purchases using stolen card details to find valid ones for larger fraudulent transactions.
Phishing and Spear Phishing - Fraudsters send fake emails, often impersonating a trusted entity, to trick merchants or employees into providing sensitive information such as login credentials, payment details, or customer data. Spear phishing is a more targeted version, where fraudsters research and personalize their attacks to specific individuals within a merchant’s organization.
Coupon and Promotion Abuse - Fraudsters exploit promotional codes, discounts, or referral programs by creating multiple fake accounts to claim benefits. They may use bots to automate this process, racking up unauthorized discounts and rewards, which hurts the merchant’s revenue.
Man-in-the-Middle (MitM) Attacks - In a MitM attack, a fraudster intercepts communication between a customer and an online merchant. By inserting themselves in the middle of a transaction, they can alter payment details or steal sensitive information like login credentials and credit card numbers.
Reshipping Fraud - Fraudsters recruit unwitting intermediaries (often through job ads) to receive goods purchased with stolen payment methods. The intermediaries, known as "mules," reship the products to the fraudsters or other locations, often overseas, making it difficult to track the original buyer or recover the stolen goods.
Business Email Compromise (BEC) - BEC schemes involve fraudsters hacking into or spoofing email accounts to impersonate business partners or executives. They then send fraudulent invoices or requests to the merchant for payment, often directing funds to a fake account. This type of fraud can result in significant financial losses before the merchant realizes they’ve been duped.
The Role of DEMAND in Mitigating Fraud
DEMAND helps businesses tackle fraud head-on. We employ a proactive approach to monitoring and defending against fraudulent activities. Here’s how DEMAND helps businesses stay one step ahead:
It is essential for anyone working on a computer with internet access to implement reliable antivirus and malware detection software. These tools play a critical role in safeguarding systems by preventing the majority of potential entry points that fraudsters may exploit.
~Implement Two-Factor Authentication (2FA)
Protect customer accounts and internal systems with 2FA to reduce the risk of account takeovers.
~Payment Fraud Detection Integrations
If you are facing challenges related to potential fraud, it is advisable to utilize a third-party fraud detection service. These services offer specialized tools and expertise to help identify and mitigate fraudulent activities more effectively.
Here are several solutions we have integrated that seamlessly work alongside your merchant service, particularly if you are not utilizing its built-in fraud prevention tools or require a more robust solution:
- Signifyd provides an AI-driven platform that protects e-commerce merchants from fraud and abuse. It guarantees chargebacks on approved transactions, meaning if they approve a fraudulent order, they cover the cost.
- Riskified focuses on frictionless fraud prevention, using machine learning to optimize and approve legitimate transactions while blocking fraudulent ones. It also offers chargeback guarantees.
- Kount is an AI-powered fraud detection solution that helps merchants reduce chargebacks, prevent account takeovers, and enhance customer experiences. It provides risk scoring, device fingerprinting, and user authentication tools.
- Forter provides real-time fraud prevention solutions that analyze customer interactions across the entire buying journey. It helps prevent payment fraud, account takeover, and returns abuse, with a focus on seamless customer experiences.
DEMAND has developed a robust service that monitors a configurable time window for order failures. In the event of an unusual spike in failed transactions—whether due to carding attacks, a defect in a recent software release, or the expiration of a client’s merchant account credentials—our system will trigger an SMS alert with detailed statistics, notifying the appropriate team that immediate action is required.
Regular log monitoring is essential for detecting anomalies in system activity, provided that logs are properly maintained. It is critical to ensure that recurring, non-essential errors are promptly addressed and resolved, as they can obscure more significant issues. By keeping your logs clean and well-organized, you can enhance visibility into potential security threats and operational irregularities.
Ensure that your e-commerce platform, payment gateways, and customer databases use the latest security measures, including encryption and secure tokenization.
At DEMAND, we place the highest priority on security and are committed to continuously monitoring and safeguarding our systems and data. We believe that awareness is a key defense against fraud, which is why we regularly educate both our employees and customers on the latest phishing schemes, fraud tactics, and social engineering threats. Through comprehensive training and proactive communication, we equip our team and clients with the knowledge and tools to recognize and respond to potential risks. Our focus on education is complemented by our ongoing efforts to monitor security incidents in real-time, ensuring that we can swiftly identify and mitigate any emerging threats. This multi-layered approach is part of our broader commitment to maintaining a secure and resilient environment for all stakeholders.
Platform-Specific Code Updates
DEMAND offers targeted, code-level updates to enhance fraud prevention for platforms such as Salesforce Commerce Cloud. As part of our commitment to security, we conduct thorough audits for our clients to identify and close potential vulnerabilities in their storefronts. These updates are designed to safeguard against various threats, including:
Unsure how to respond in the event of a fraud attack? We provide comprehensive, step-by-step mitigation plans to help you effectively combat and prevent malicious activities. Our tailored strategies are designed to guide you through the process of identifying, addressing, and mitigating the impact of fraud, ensuring your business is protected from further disruption.
In a world where digital fraud is constantly evolving, businesses must embrace proactive and comprehensive solutions. DEMAND offers businesses proactive monitoring, fraud prevention code updates, security audits, and a wealth of knowledge to effectively help mitigate fraud risks. Our proactive approach means that businesses are no longer simply reacting to threats but actively preparing and defending against them.
For businesses looking to protect their reputation, financial health, and customer trust, investing in fraud mitigation is no longer optional—it is essential. By staying vigilant and proactive, companies can confidently navigate the ever-changing landscape of digital threats.