AlgoZone Fraud Screening (AFS) Module

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Having an online store is one way to reach customers for your products worldwide. The boom of e-commerce sites are because of the diverse visits your site gets which lead to revenue. Where there is revenue there is profit and there is also the potential of your income generating site to be defrauded. Fraudulent purchases have reportedly cost e-commerce merchants over $4 billion in 2008 alone. The culprit is what they call “chargebacks” which is defined as any card payment that the card holder returns to the merchant bank.

Let’s say my credit card number is entered for a solar powered watch which costs $555 + shipping fee to Tahiti. The charge goes through the site owners shopping cart software billing, once processed my card receives the credit of the amount currency of the transaction. The my credit card company then debits the amount from the merchant bank account of the Solar watch merchant, responsibility is assumed by the merchant or the shopping cart site owner. It so happens that I live in the UK and haven’t even made the purchase and it was established that my credit card information was stolen and used without my authorization. The site selling the solar powered watch then has to concede and have the currency amount charged to their account – in most cases they also lose the product that is delivered too.

Charge backs happen, but the frequency of this happening and the causes can be lessened if not avoided. For our Magento shopping carts, a downloadable plug-in called the Algozone Fraud Screening Service. Depending on a business site, there are AFS modules for small, medium and large business sites.

With an AFS enabled shopping cart, fraud screening process starts at the time a customer places an order, the IP address is recorded as well as several information a customer types in the fields. This information goes through the AlgoZone servers and is used to detect which transactions are fraudulent.

Though the AFS provides a reading on the transaction information, the site owner has the final say in processing the purchase. To see the AFS report and recommendation, the site owner goes to Admin > order review screen to check out the order details of a customer. Fraud levels are shown in a table which would show the AFS results for the transaction on the upper left. Low risk fraud level is from 0.01, as the risk level gets higher the more questionable the information was typed in the purchase form.

Fraud levels are determined using the following information given during the purchase process:

Mail domain – most often fraud is done using a free email address. Since the domain is free, information to register for one can be bogus too.

Email – a cross check for emails of known “carders” (credit card fraudster)

Geographic source – IP addresses of the computer used in the transaction most often should match the country IP address specified in the billing address.

Proxy – there are IP addresses that register as anonymous, usually there is a program that prevents for an IP address to be displayed.

Open Proxy – IP address checks out to be an open proxy

Spam – Spam source IP’s are often recorded, IP addresses are checked against a list.

BIN – this number is associated to the IP address of the bank where the credit card is issued

Another fail – safe confirmation of a transactions is making a contact number a required field to be filled up in every form. A fraud level that scores in the middle range can always be confirmed via phone.

A business is hard work and cunning, getting a fraud screening plug-in lessens putting your e-commerce site at risk for carders.