CNP Frauds and How to Avoid Them

Among many credit card scams, Card-Not-Present (CNP) fraud has become very popular with scammers and fraudsters. Main reason behind the popularity of a CNP scam is that the scammer is not required to be physically present at the site where scam plays out. Secondly, it is easier because the business representative is not able to physically inspect the credit card for a misplaced or missing hologram or changed account number, the usual pointers in conventional credit card frauds.  

One statistical report indicates that the numbers of CNP frauds are increasing worldwide. In the US alone, the portion of CNP frauds in all type of credit card scams has increased by 5% in just two years.

How CNP fraudsters triumph over the credit card payment processor?

There are some inbuilt measures taken by the processor to limit the possibility of CNP frauds. These steps include:

  • Matching the billing address provided by the user at the time of credit card registered with the address provided at the time of transaction

  • Validating the authenticity of Card Verification Value (CVV) security code of three digits

CNP scammers override these preventive measures with the stolen information of cardholders.  In most of the cases, CNP scammers steal more than enough information to carry out the scam. To make sure that they succeed with their heist, scammer focuses on getting five information pieces.

  • Cardholder’s name

  • Billing address

  • Account number

  • CVV security code

  • Expiration date of the credit card

This information is illegally retrieved through three means:

Phishing: It is one of the most popular ways of stealing financially or otherwise sensitive information of any individual or entity online. In phishing, scammers pose as a reliable entity through any electronic mean of communication (Phone or internet) to obtain the information for to abuse and misuse it.

Crooked Staff: Credit card information can also be stolen by the employees of any business who have the credit card details of their clientele.  

Hacking: Tech-savvy fraudsters also retrieve the information by hacking into the databases of companies and businesses having sensitive financial details of their clientele.

CNP frauds: affecting small ventures

In most instances of CNP frauds, the business or merchant, where the fraudulent CNP transaction happens are liable for the losses. CNP frauds can have a considerable effect on the net profit margin of small ventures, especially of retail type. Therefore it is important for them to remain diligent and train their staff and people accordingly to avoid the monetary losses in the name of CNP frauds.

There are some measures businesses can adapt to prevent CNP frauds particularly if they accept payments by phone or online.

Verifying transaction information

Fraudsters are on the binge to max credit card limits. In doing so, they often perform many random transactions without keeping the record. Before delivering the product, it is better to verify the transaction details. If the customer (or CNP fraudster) is unable to verify the details then you should halt the transaction.

Double-check the urgent shipment requests

An average customer wants to avoid shipping charges if he/she is offered with free of cost shipping option. But fraudsters don’t care much about that and their purpose is to get the shipment as soon as possible. Therefore in any case of priority shipment request, it is better to double-check the veracity of the transaction.

Altered order pattern from returning customer

If order from a repeat customer is not following the established pattern then try to reach out to the customer to verify the transaction.

MasterCard SecureCode and Verified by Visa

These two major Credit Card Associations have introduced services to prevent CNP frauds that are happening in the domain of e-commerce. Verified by Visa and MasterCard SecureCode are the security features enable cardholders and merchants to authenticate the nature of transaction with their respective card issuers through personal passwords established at the time of registration. These services enable businesses to avoid CNP frauds and unauthorized chargebacks.

Adopt PCI compliance

If your business is accepting credit card payments then you should immediately adopt Payment Card Industry (PCI) compliance with your payment system. Payment Card Industry Security Standards Council has planned out a set of regulation in the form of PCI compliance levels to prevent any type of card fraud.   

Taking all the necessary measures on your part can certainly help you in preventing the losses incurred by CNP frauds.