In today's digital age, businesses face numerous threats, with card testing fraud being one of the most prevalent and damaging. Card testing fraud involves scammers using stolen debit and credit card information acquired through data breaches to identify active cards. The validated cards are then exploited for immense online purchases or are traded among fraudsters. Let's dive deeper into card testing fraud, its types, impacts, and how businesses can prevent it.
Kinds of Card Testing Fraud
- Online Account Testing: Scammers add stolen card details to newly created online accounts to check their validity. They don't need to complete a transaction; they only need to enter the card details to confirm its validity.
- Payment Validation: Scammers make small payments to check the validity of cards. These payments are often made in minimal amounts to prevent any suspicion.
- Automated Testing: Scammers deploy bots for one or bulk card testing, significantly increasing fraud's speed and scale.
Impacts and Susceptibility of Card Testing on Businesses
Newly opened and small businesses are most susceptible to card testing. Those with recently established online sites and mobile applications may not have implemented fraud detection tools or proper protections, allowing scammers to test cards effortlessly.
These harm businesses in various ways, such as the loss of revenue. Chargebacks could pile up once the actual cardholders catch and dispute unauthorized transactions found on their card statements. Chargebacks and their associated fees could accumulate fast, causing financial trouble and stress to business owners.
When a business is considered a high-risk merchant due to significant declines and fraud, merchants could face higher processing fees and payment processing account closure.
An increase in chargeback rate would also occur with persistent chargebacks a business receives, leading to account warnings and being enlisted into monitoring programs. A company could also have a higher decline rate, making all transactions seem riskier and missing out on legitimate sales.
Businesses should also take action and employ proper account protection to improve their account security and avoid damaging their reputation with their customers, payment processors, and banks.
Preventive Strategies for Businesses
There are multiple strategies businesses can employ to reduce risk and protect themselves from card testing fraud.
- Limit Transaction Attempts: Merchants should restrict the number of attempts allowed when completing the transaction, as it limits the opportunity for scammers to guess other necessary card details.
- Use a Captcha System: This differentiates whether a human or a bot is accessing a given website and protects businesses from fraud or spam.
- Employ Fraud Tools: Utilizing the right fraud tools and measures, such as the Address Verification Service and IP monitoring, can allow merchants to flag fraudulent transactions and users easily. Chargeblast offers these tools for free. Try it out here.
- Require Card Security Codes: Requiring CVV codes from customers can assist in obstructing fraudulent transactions.
- Mandate Customer Sign-Ups during Checkout: Encouraging buyers to sign up during checkout reduces the business's vulnerability.
- Enforce Firewalls: Using firewalls is critical for businesses as they generally include bot prevention features, hindering card testing incursions.
- Partner with Third-Partner Companies: Numerous companies like Chargeblast offer professional services that provide consulting to detect and help businesses recover from card-testing attacks or other types of fraud.
By staying informed and proactive, businesses can significantly mitigate the risks associated with card testing fraud, protecting their financial health, reputation, and even customers.
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