International payment service provider and direct bank card acquirer, ECOMMPAY, has today cautioned that attempted fraud levels have increased by two to three times their previous levels during the past year. 

Based on the attempted fraud transactions that ECOMMPAY has flagged and prevented over the last 12 months, its data has also shown the UK has the highest attempted fraud level among the EU countries ECOMMPAY serves, and that record levels of fraud attempts are largely due to merchants’ insufficient knowledge of fraud prevention strategies, consumers taking few safety precautions, and greater activity among fraudsters overall. 

ECOMMPAY reported the most common scenarios causing risk of online fraud were:

1.     Merchants disabling part of the client or customer verification process, for example a feature where the user takes a ‘selfie’ with the payment card to verify their identity

2.     Merchants allowing people to add an unlimited amount of payment cards to one account, allowing fraudsters to register with their personal card and add stolen payment cards afterwards

With the pandemic limiting face-to-face interactions, criminals have been turning to more sophisticated, online methods to steal and illegally use money. As well as this, many consumers may have been transacting online for the first time, making them more susceptible to fraudsters’ approaches.

“Fraudsters are aware that there is an influx of new adopters to digital transactions and online e-commerce brought about by COVID,” said Paul Marcantonio, Executive Director, UK & Western Europe at ECOMMPAY. “These new adopters are amongst the most vulnerable as they may be exposed to these new methods to trick people out of personal data and money.

“While merchants will be looking to grow their conversion rates and attract new customers, this cannot come at the expense of customers’ data and money, and those merchants using risky practices to boost business also risk being blacklisted by payment systems and suffering major reputational damage. At the same time, payment providers have a responsibility to keep merchants educated and informed on risks and how to improve their risk control systems - something ECOMMPAY takes seriously.”

Taavi Tamkivi, CEO of Salv and speaker at ECOMMTALKS agreed with Paul’s sentiment.

“For criminals, crisis and chaos always create opportunities to target weaknesses and exploit the most vulnerable. During COVID there has been a systematic increase in investment scams and all forms of cybercrime. These all happen very quickly and the money transferred to scammers can be relatively small, so there is definitely a lot more pressure on compliance and AML teams to learn and adapt quickly. Compliance and financial intelligence teams themselves have to adapt to the new reality of remote working, and limited and/or reduced resources. Also, as compliance teams struggle to allocate resources to deal with the increased volumes of the above-mentioned scams, spotting more complex money laundering patterns can be a difficult focus to maintain.”

How ECOMMPAY battles fraud

To resolve these issues, it’s important that merchants work with payment providers that have rigorous methods to spot and eradicate fraud in place.

ECOMMPAY, for instance, is teaching its proprietary Risk Control System with machine learning. The system accumulates and analyses all historical data about transactions in real time, boasting a 97% fraud detection rate thanks to its use of AI and machine learning. Based on this research and fraudulent activities the system identifies, it can determine the fraudulent patterns at play and also the fraudsters' online footprint. For example, one finding from the system is that fraudsters are generally connected to one another, and also are often connected with their victims in some way. Manual processes accompany this, with managers analysing transactions too and looking for correlations among fraudulent transactions. The company also analyses each company’s transactions separately from each other to understand the specific fraud patterns of a given business and help mitigate risks by creating remediation plans for each fraud attack.