Data breaches breed more online payment frauds

Data breaches breed more online payment frauds

Used to be that data breaches only happen once every few years. Sadly, that is no longer the case. We keep hearing about breaches on a fairly regular basis these days. The amount of data stolen in breaches are gold to online scammers. This is especially true if the data includes financial info such as payment card details. On the dark web, such info may be sold for a few cents per card but the value when used to purchase items fraudulently online could be potentially huge.

Online merchants risk massive financial losses

As mentioned above, the stolen payment cards are sold pretty cheaply in bulk. Hence, the potential for a scammer to cause massive financial losses to online merchants is a very real possibility. When the real credit card holders find out about the unauthorized charges to their cards, for sure they’ll dispute the transactions and file chargeback claims. Coupled with the loss of the goods shipped to the fraudsters, smaller merchants could face a crippling blow to their business. Some might even have to declare bankruptcy if things get really out of control.

How can merchants mitigate these frauds?

That’s where FraudLabs Pro come in. The fraud detection algorithm was designed from ground up to help merchants combat online payment frauds in a cost-effective manner. There are many components in the FraudLabs Pro fraud detection service which work together to filter out most fraudulent orders on merchants’ websites.

First and foremost, the ability to get the geolocation of the online buyer from their IP means that merchants can see where the buyer is located versus their billing address. If the distance is huge, that’s a red flag.

In addition, there are velocity checks in FraudLabs Pro which allows the merchant to trigger manual reviews whenever the total purchase amount by that person exceeds a particular threshold. That is pretty useful since the scammer would most likely buy many items with a particular card to maximize his haul.

Blacklists of fraudsters and compromised credit cards are also continually updated via the FraudLabs Pro Merchant Network. When one merchant in the network reports a fraudster, the info is available immediately to protect all other merchants using the FraudLabs Pro fraud detection service.

The ability to have customized rules to trigger a manual review or rejection of orders is also handy as not all businesses have the same risk profile. Thresholds can be adjusted according to each merchant’s needs.

SMS verification also available to screen buyers

The protection afforded by the FraudLabs Pro fraud screening service is already very comprehensive with checks being done on geolocation, proxy validation, billing vs. shipping address validation, credit card validation, email address validation, etc. For another layer of security to discourage fraudsters, merchants can always opt for the SMS verification service as well.

The FraudLabs Pro SMS verification service can be integrated easily into the online order flow to trigger an automated SMS to the buyer’s mobile phone with a One-Time-Passcode (OTP). In order for the order to proceed, the buyer will need to key in the OTP sent to their phone to verify their identity.

Read more about the FraudLabs Pro features.


Online merchants no longer have to be at the mercy of scammers and fraudsters. All they have to do is rely on the FraudLabs Pro fraud detection service to keep their business running without worrying about frauds. Since the service is free for up to 500 order screenings a month, all merchants should include FraudLabs Pro in their online stores.

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