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Leading Strategies in Fighting Fraud and Reducing Risk
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Leading Strategies in Fighting Fraud and Reducing Risk

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As a developer or merchant, you’re always looking for ways to expand your online business opportunities. But whether you host online video games or sell physical goods, you’re vulnerable to fraud. …

As a developer or merchant, you’re always looking for ways to expand your online business opportunities. But whether you host online video games or sell physical goods, you’re vulnerable to fraud. That’s because many of today’s criminals purchase digital or physical goods with stolen credit cards, sell the goods illegally, and pocket the cash. Liability for a fraudulent online transaction always rests squarely on you, the merchant. Unauthorized purchases eventually show up as chargebacks filed against you by the rightful owners of the stolen credit cards. This session will cover important methods to prevent fraud, how PayPal protects most transactions, and how to resolve problems, disputes, or chargebacks.


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  • 1. LEADING STRATEGIES IN FIGHTING FRAUD AND REDUCING RISK Peter Martin, North America Risk Consulting Colin Rule, Director, Resolutions & Protections
  • 2. AGENDA
    • Fraud Overview
    • Industry Best Practices
    • How Can PayPal Help?
  • 3. FRAUD 101
    • What is fraud?
    • What makes internet fraud unique?
    • Questions to ask yourself
  • 4. TYPES OF FRAUD
    • Consumer fraud
    • Merchant fraud
    • Phishing
    • Social engineering
  • 5. WHAT CAN YOU DO?
    • You cannot stop all fraud (cost of doing business).
    • The fraudster is smarter than you think.
    • Be proactive about your fraud strategy.
    • Risk analysis and good fraud management is key to success.
  • 6. AGENDA
    • Fraud Overview
    • Industry Best Practices
    • How Can PayPal Help?
  • 7. INDUSTRY BEST PRACTICES
    • Be vigilant
    • Authenticate each transaction
    • Real-time authorizations
    • Reduce customer errors
    • Manual review
    • Robust risk rules customized for your business
    • Comprehensive and dynamic fraud scoring
    • Bayesian filters
    • Neural nets
    • Cross merchant and buyer data analysis for patterns
    • Cross channel data analysis patterns
  • 8. KNOW YOUR CUSTOMERS
    • Identify accounts that are:
      • Compromised through the theft of credentials (account take over)
      • Created for use with stolen financials
      • Created for use by money mules or as money laundering intermediaries
    • Device Attributes
    • IP address mapping
    • Geo-location and proxy piercing
    • Device fingerprinting
    • User Characteristics
    • Phone/address verification
    • Secret questions
    • Validation (CVVR, AVS)
    • Fraudster Identifiers
    • Data mismatches
    • Velocity of order
    • Type of product (fencible goods)
    • User Behavior
    • Purchase patterns
    • White lists and negative lists
  • 9. CASE STUDY 1
    • Customer Name: Sandy Ibokwe
    • Product: Ancient Egypt in Africa
    • Amount: $310.00
    • Payment: MasterCard, Guaranty Trust Bank (Nigeria)
    • AVS: Not available
    • CVV2: Matched
    • Return Customer: No
    • Email: Ibokwe@yahoo.com
    • Address: Internal Control & Audit Dept.
    • 54, Seaside, Lagos XX, 2357
    • Nigeria
    • Phone: 2348023137654
    • IP Address: 41.219.204.168 (Nigeria)
  • 10. CASE STUDY 1
    • Customer Name: Sandy Ibokwe
    • Product: Ancient Egypt in Africa
    • Amount: $310.00
    • Payment: MasterCard, Guaranty Trust Bank (Nigeria)
    • AVS: Not available
    • CVV2: Matched
    • Return Customer: No
    • Email: Ibokwe@yahoo.com
    • Address: Internal Control & Audit Dept.
    • 54, Seaside, Lagos XX, 2357
    • Nigeria
    • Phone: 2348023137654
    • IP Address: 41.219.204.168 (Nigeria)
    Customer
  • 11. CASE STUDY 2
    • Customer Name: Lisa Davis
    • Product: Flower Bouquet
    • Amount: $57.99
    • Payment: Visa, First Union National Bank
    • AVS: No Match
    • CVV2: Matched
    • Return Customer: No
    • Email: DMurphyy@aol.com
    • Address: 8475 First Avenue
    • Atlantic Beach FL,32233
    • United States
    • Phone: 9048769243
    • IP Address: 70.145.165.110 ( USA ) Orange Park, FL
  • 12. CASE STUDY 2
    • Customer Name: Lisa Davis
    • Product: Flower Bouquet
    • Amount: $57.99
    • Payment: Visa, First Union National Bank
    • AVS: No Match
    • CVV2: Matched
    • Return Customer: No
    • Email: DMurphyy@aol.com
    • Address: 8475 First Avenue
    • Atlantic Beach FL,32233
    • United States
    • Phone: 9048769243
    • IP Address: 70.145.165.110 ( USA ) Orange Park, FL
    Fraud
  • 13. AGENDA
    • Fraud Overview
    • Industry Best Practices
    • How Can PayPal Help?
  • 14. MANAGING YOUR RISK 1 2 3 Fraud Prevention Issue Resolution Protection
  • 15. PayPal BEST PRACTICES
      • PayPal deals with fraud in a systematic manner during the account and transaction lifecycle.
      • Registration
      • Prevention
      • Detection and recovery
    REGISTRATION LOSS PREVENTION DETECTION & RECOVERY
  • 16. FRAUD DETECTION
    • PayPal has built a world-class system to detect fraudulent transactions:
      • Proprietary antifraud risk models and fraud detection techniques
      • Antifraud specialists proactively monitor transactions 24 hours/7 days per week
      • Patent-pending bank account verification
      • Safeguard sensitive information using state-of-the-art encryption
      • Industry-recognized address verification system (AVS) and card security code checks
    Prevent Filter Identify Act
  • 17. DETECTION
    • Review account history of the flagged account and linked or related accounts.
    • Call the account holder.
    • Call the counter party in the transaction.
    • Call the bank/credit card issuer.
    • Request fax documents.
  • 18. FRAUD MANAGEMENT FILTERS 1. Set filters. 2. Review incoming transactions.
  • 19. PAYMENT REVIEW
  • 20. MANAGING YOUR RISK 1 2 3 Fraud Prevention Issue Resolution Protection
  • 21. WHEN TRANSACTIONS GO RIGHT Payment Shipment Order
  • 22. WHEN TRANSACTIONS GO WRONG Payment ISSUE Order
  • 23. RISKS OF SELLING Selling online Selling in a store RISKS Returns Lost shipments Unauthorized payments False claims Shoplifting Bounced checks Counterfeit currency Returns
  • 24. ISSUE RESOLUTION Merchant
    • Integrated shipping
    • Refunds
    • Dispute process
    • Chargebacks
    • Resolution Center
    • Detailed listings
    • Realistic delivery times
    • Ship with tracking
    • Respond to inquiries
    • Pack carefully
    • Buy postal insurance
  • 25. THE PayPal DISPUTE PROCESS
    • Buyers can file disputes with PayPal if they:
      • Didn’t receive the item
      • Received the wrong item
      • Don’t recognize a payment
  • 26. CHARGEBACKS – THE BUYER’S PERSPECTIVE
  • 27. CHARGEBACKS – THE SELLER’S PERSPECTIVE Representment Process Merchant 30-90 days -$
  • 28. CHARGEBACK CLAIMS
  • 29. MANAGING YOUR RISK 1 2 3 Fraud Prevention Issue Resolution Protection
  • 30. PayPal IS ON YOUR SIDE Merchant
    • Chargeback specialists
    • Seller protection at no additional cost
    • Monitors buyers
    • Keep shipping documents
    • Keep buyer correspondence
    • Respond promptly
  • 31. EXPANDED SELLER PROTECTION
  • 32. CHARGEBACK PROTECTION
    • If you resolve a dispute during the PayPal claims process, you are 100% protected against any future chargeback for the same transaction.
    • PayPal will handle the issue without even notifying you.
  • 33. CONCLUDING THOUGHTS
    • We promote e-commerce growth by proactively managing risk.
    • We encourage merchants and developers to also manage their risk and implement effective fraud prevention strategies.
    • PayPal allows all developers to engage in world class risk management.
      • PayPal is committed to helping you detect fraudulent transactions up front.
    • PayPal takes a three-phase approach offering fraud prevention, issue resolution, and protection.
  • 34. MORE INFORMATION
    • Colin Rule ( [email_address] )
    • Peter Martin ( [email_address] )
  • 35. LEARN AND SHARE
    • www.x.com
    • Twitter:  @paypalx
    • www.facebook.com/paypalx
    • Innovate 09 hashtag:  #ppxi09
    LEARN AND SHARE www.x.com Twitter: @paypalx www.facebook.com/paypalx Innovate 09 hashtag: #ppxi09 Proprietary