Online fraudsters have always been a shifty bunch. The worst part is, it’s their chameleon-like nature that is part of their ongoing success, as well as every fraud managers’ nightmare.

According to the Banking Times article, “Criminals shifting to card-not-present fraud because of chip and PIN success,” they are on the move again. Data recently released by FICO, a leading provider of analytics and decision management technology, shows that across Europe card-not-present (CNP) fraud has dramatically increased, accounting for 72% of all fraud losses between March 2009 and March 2011. The big reason for this change? Chip and PIN technology, which has helped reduce counterfeit fraud by 60% over the same period.

In comparison, a similar study conducted three years ago found that ‘card present’ fraud accounted for 60% of Europe’s credit card fraud. But since European banks adopted the smartcard payment system, that number has dropped significantly over the past couple of years.

So, remaining consistent to their adaptive nature, it appears that cyber criminals have shifted their attention to CNP schemes like online fraud, targeting countries and business systems with weaker detection and prevention capabilities, said Martin Warwick, FICO’s Fraud Chief in Europe, the Middle East and Africa. (more…)

Good news in the fight against online fraud. The Financial Fraud Action UK recently announced that fraud stemming from card-not-present (CNP) transactions fell 8% over the same period last year.

In the InternetRetailing article, “Online shopping fraud down in first half of 2011,” during the six months ending in June, online shopping fraud including mail order and phone fraud dropped to £109.2m compared to the £118.2m in fraud losses in the first six months of 2010.

Source: Financial Fraud Action UK, Cheque & Credit Clearing Company and The UK Cards Association

While findings like these are certainly encouraging, it doesn’t mean the bad guys have given up. Far from it. While an increase in fraud protection measures play a significant role in the declining numbers, once a security hole is filled fraudsters typically turn their energies elsewhere.

DCI Paul Barnard, head of the Dedicated Cheque and Plastic Crime Unit (DCPCU), is quick to point out that while online shopping fraud losses are down, the fraudulent use of lost or stolen cards is up 20%.

“There has been an increase in old fashioned scams – criminals using distraction techniques and social engineering methods to get hold of people’s cards or phone banking details. We are urging everyone to be on their guard.”

As organized cyber criminals shift tactics, the ability to expose thieves who are fraudulently using someone else’s personal or financial information to purchase items online is essential to preventing fraud or abusive activity that impacts consumers and an online business’s bottom line. This is something iovation does every day for merchants that sell goods and services over the Internet.

Checking millions of daily transactions coming into our B2B customers’ websites against our dynamic, device reputation database that’s now 715 million deep, iovation’s ReputationManager 360 provides real-time device intelligence IT fraud teams need to instantly recognize and reject bad orders on the spot to prevent an array of fraud techniques and social engineering schemes designed to defraud today’s online businesses.

The attack vectors of online scams morph faster and faster, making it consistently more difficult for security professionals to develop effective preventative solutions. Merely keeping pace with fraudsters’ latest tricks is not enough to adequately protect a system or network. This is especially true for online retailers and other businesses that open their virtual doors to international business.

According to the article, “Credit card fraud is a cross-border crime,” statistics have shown in recent years that online fraud trends can differ dramatically between countries. For example, online payment fraud in the UK dropped 10% from 2009-2010, while the US experienced a 157% rise in attempted payment fraud during that same period. (more…)

It’s been described as the event that has the greatest potential for credit card fraud to ever occur in U.S. history. Fraud experts are saying that the recent Sony PlayStation Network data breach, in which hackers stole information on 77 million customers, could easily spill over to online retailers market if the cyber criminals got their hands on members’ credit card numbers.

In the Internet Retailer article, “Sony data breaches highlight the fraud risks online retailers face,” it was first disclosed that hackers made off with customers’ names, street addresses, email addresses and dates of birth. However, updated reports now say that up to 10 million credit cards may have been compromised. (more…)

As Internet advancements change the competitive landscapes of industries across the globe, fraud prevention mechanisms are essential to filter online payments and flag or stop suspicious transactions.

According to the article, “Securing Internet Payments,” 70% of all fraudulent credit card transactions originate from card-not-present (CNP) transactions. This has a substantial impact on the public’s confidence using their credit card for online transactions. Lacking the capability to prevent unauthorized transactions and associated fraud and abuse ultimately trickles down to Internet-based businesses’ bottom line revenues and profits. (more…)

When it comes to building and maintaining a strong online reputation, organizations know that perception is reality. That’s why many Internet-based companies are proactively taking additional security measures to ensure the safety of their customers and websites. It’s a key strategy for preserving a safe and reputable brand reputation.

But what happens when industry perception is beyond your control? Can online businesses protect themselves from consumer perceptions of the industry as a whole? And what kind of impact can consumers’ fears of shopping online have on online merchants? (more…)

We’ve recently learned that iovation ReputationManager 360 has been selected by the Info Security Products Guide as a finalist for this year’s Global Excellence Awards. Our fraud prevention service, which combines device identification, device reputation and real-time device risk reporting to prevent card-not-present (CNP) fraud and other online abuses, has been recognized in the categories of Risk Management and Best Security Service.

While this and the other accolades we’ve received lately have been nothing short of overwhelming, we are extremely proud of being recognized by industry leaders and associations across multiple industries. Because we serve online retail, gaming, social community and financial services companies, the acknowledgements have been a testament to iovation’s ongoing commitment to make the Internet a safer place to interact and conduct business, as well as reinforces the positive impact we make in the everyday lives of our customers by protecting their online transactions to reduce fraud rates.

The 2011 Global Excellence Awards will be announced at an awards gala, February 16th, in San Francisco.

While online payments is the fastest growing segment of retail and payments, it also continues to be one of the riskiest. As cyber criminals step up their game and adapt new techniques to defraud online and card-not-present (CNP) merchants, payment providers and online retailers must take steps to protect their networks from organized fraud rings. (more…)

While overall percentages of online fraud continue to climb, one of our partners in fighting cyber crime, Retail Decisions (ReD), reported that card payment fraud in the UK dropped an estimated 15% last year. According to the article, “ReD Estimates a 15% Drop in UK Card Payment Fraud in 2009,” the value of online, mail order and telephone order fraud dipped to GBP278 million in 2009 from GBP328 million in 2008.

Retail Decisions CEO, Carl Clump, credits innovations in fraud prevention technologies for the estimated 15% decline over the past year. This defied the trend where overall CNP (card not present) fraud losses have grown consistently over the past five years. Despite the total drop in losses, Clump was quick to point out that the current trend, which would continue well into 2010, may not be here to stay. (more…)