Preventing eCommerce Chargebacks what Merchants can do DRF EU Conference 2006 Basel Sven Slazenger B

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Preventing eCommerce Chargebacks what Merchants
can doDRF EU Conference 2006 Basel Sven
SlazengerBDOA e.V. Assn. of Service Providers
for the Online IndustryManaging Director,
InterLake GmbH Munich
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Merchant Situation
Situation

• Revenue Leakage as a percentage of business
  revenue through online / mail order fraud is
  up to 40 times higher than in an offline
  environment. (Internet Fraud Prevention Advisory
  Council)
• Although there are less stolen and counterfeit
  cards out there, revenue loss due to fraud is
  rising. One of the main factors is identity
  theft. Financial services companies lost 4
  billion USD in 2003 due to identity theft
  (IDC)
• E-Mail (63.5) and the web (23.5) were the two
  primary mechanisms by which fraudulent contact
  took place. (IC3)
• Merchant Risk Council member merchants spend
  more 17 spend gt2 of revenue on fraud
  prevention and cut fraud rate by 50

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Who can fix it?
Fix it

• Create metrics for your business and report
  these to management. Currently 63 of
  retailers regularly report fraud metrics to
  C-level executives or directors.
• Have a fraud rate, based on chargebacks, of less
  than 0.2. Currently 66 of the retailers have
  this rate (Online equal to offline!)
• Use a variety of fraud prevention tools. The top
  five fraud prevention tools are Address
  Verification Systems (used by 83 of online
  merchants), customer follow up (81), the use of
  Card Verification Codes (75), real time
  authorization on the use of credit cards (67)
  and post process fraud management - following up
  with the consumers when the order looks
  suspicious -(64).
• Continue to implement new technologies to combat
  fraud gather as much information as you
  can.Figures are based on Feb 2006 survey of
  Merchant Risk Council Members

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KUNO
System

• Merchant influence can accomplish something
• German merchants lost 50 mio EUR each year
  through fraud with stolen EC cards and
  signature at POS and Online.
• Information on card theft reaches merchants and
  PSPs too late.
• Merchant organization lobbying brought the
  solution KUNO
• German departments of the interior decide for a
  system that gathers stolen EC card data as
  reports are filed with the police.
• Information is pulled from the Police network to
  an online database and made available to the
  large PSPs in real time.
• Card usage is blocked at POS and Online
• Fraud is down by 25 mio EUR per year
• Total cost of systems operation 0,1 mio EUR per
  year

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Sven Slazengerslazenger_at_interlake.net
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