Bio of a Fraudster


The problem with credit card criminals is they operate in secret, and the problem with organizations fighting them is they don't reveal their methods. So, we know little hard information about the size and scope of credit card fraud, except that it is immense. Research into publicly available documents reveals that losses in the United States range from $1 billion to $2 billion annually. Another frequently quoted figure suggests that five cents to seven cents of every dollar transacted by credit cards is fraudulent.

Wouldn't it be valuable if you knew the profile of the next person to commit credit card fraud against your organization? During a recent visit to the RIS office, CEO Carl Clump of Retail Decisions (ReD) provided us with just that — a biography of the typical credit card not present (CNP) fraudster.

Retail Decisions is a provider in payment services worldwide with a blue-chip client list that includes Wal-Mart, Tesco, Sears, Federated, Netflix and many others. Analyzing trends across more than 1 billion card transaction per year gives Clump a statistical snapshot of the typical CNP fraudster. Here is what the criminal looks like.

Your next fraudster will use a non-domestic card issuer, most likely from Mexico, Eastern Europe or the Arabian Peninsula, and use an e-mail address from a free e-mail provider (Gmail by Google, Yahoo! Mail, MSN Hotmail and others).

Goods purchased will be highly re-saleable and desirable, notably gift cards, PDAs, DVD players, laptops, game players, fitness equipment and name-brand sports apparel.

Fraudsters shop between 1 p.m. and 5 p.m., and order size 10 shoes, Nikon 8 Coolpix and Canon 3.2 Powershot digital cameras, Treo 650 cell phones, cashmere sweaters, and baseball clothing with logos of the New York Yankees and Boston Red Sox. They choose overnight shipping, and their prime receiving states are California, New York, Florida, Texas and New Jersey.

Clump observes that for most retailers one of two things is typically out of control — either fraud costs or the costs to contain it. Sophisticated algorithms, neural technology and the elimination of manual review are the keys to fighting fraud, and are central to ReD's new PRISM fraud prevention solution.

I wonder if the new solution can determine if fraudsters are more likely to be Yankees or Red Sox fans? You can't be both. That would be criminal.

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