Fight Card-Not-Present Fraud In A Card-Not-Present World

In the age of the coronavirus, everyone is conducting all facets of daily life – commerce, banking, schooling, working – from home.

In an interview with PYMNTS, Mitch Pangretic, senior vice president of strategic partnerships at Elan, said that in-person card fraud may have decreased thanks to EMV chips and multi-factor authentication, but card-not-present (CNP) scams are increasingly gaining traction.

“Mobile transactions have become the latest opportunity for fraudsters,” he said.

The good news, Pangretic added, is that consumers and businesses are getting better at detecting fraudsters trying to ply their trade across mobile and online transactions.

That improvement of fraud detection and prevention, he said, comes courtesy of the direct digital connection that has been created by issuers, spanning text messaging and email functionality, which are leveraged to confirm purchases.

“This can really create a proactive communications strategy to significantly decrease the incidence of successful fraud attempts,” said Pangretic.

On the “back end” of the business, Elan leverages state-of-the-art fraud detection tools to identify and prevent transactional fraud, account takeover and fraudulent applications.

Pangretic cautioned that there will continue to be a rising tide of email scams (phishing) and synthetic fraud. In the case of synthetic IDs, fraudsters target consumers’ personal details such as Social Security numbers, place or date of birth, or other pieces of data to create new personas, and then apply for cards or loans.

ID theft, in general, is behind 80 percent of all banking industry credit card losses, he noted.

“Institutions should not just rely on one piece of data to validate the identity of a person when opening accounts,” said Pangretic, adding that it is imperative for banks to gather credible identity information from multiple points and then train employees to identify red flags while following KYC guidelines.

Against that backdrop, he advocated that card programs embrace partnerships and outsource some risk management functions. Credit card partners can review transactions across pre-set criteria, review new account applications and facilitate card alerts.

Interacting With The Cardmember

If cardmembers are alerted to anything out of the ordinary (say, through a text message asking for verification), it’s important for issuers and partners such as Elan to determine “whether we can act on those alerts quickly in order to resolve them – for instance, if there’s a ‘false positive’ block that can be resolved so there’s no spend interruption,” Pangretic said.

He noted that a fully digitized process can ask cardholders to verify transactions, call into a call center (with safeguards in place) or initiate and ultimately resolve disputes over a mobile device. Elan has stated that the majority of those disputes can be resolved during the first call.

According to Pangretic, issuers and partners must take steps to educate consumers about the technologies and tools designed to fend off fraudsters and give users greater control over their financial lives. Services can include the ability to view account activity on a mobile app, turn cards on and off, set transaction-based alerts and deny transactions.

“We think of a card in our pocket as just a piece of plastic or in a digital wallet, but it’s really about human interaction,” he told PYMNTS.