26 Feb Protect Your E-Commerce Business From the Threat of Mixed-Cart Fraud
EMV chip card technology has made in-person payments safer than ever, but many online businesses are still an easy target for credit card fraudsters. In 2018, credit card fraud increased 18.4%, and that number is still climbing. December 24th and 25th are the busiest days for credit card fraud in the U.S., but fraud and chargeback prevention software Riskified warns that e-commerce businesses need to be on alert all year long. And there’s a new threat that business owners should know about: mixed-cart fraud.
What is mixed-cart fraud?
Mixed-cart fraud is a two-step process created by fraudsters to circumvent traditional fraud detection methods. First, the fraudster purchases physical items to be shipped to a victim’s legitimate address. Next, the fraudster adds digital gift cards to the order, to be delivered to their own email address.
The main reason mixed-cart fraud is so difficult to prevent is because the physical portion of the order is typical. Since the address on the card being used matches the real shipping address of the cardholder, the transaction passes Address Verification Service (AVS) filters (if enabled).
When an order involving mixed-cart fraud is approved, the victim receives the physical goods they (unknowingly) paid for, and the fraudster receives the digital gift cards. From there, fraudsters can quickly spend that digital currency, or pawn it to a secondary gift card resale marketplace for some quick cash.
Who’s the target of mixed-cart fraud?
Digital gift cards offer a great opportunity to generate incremental income, but any e-commerce business that sells both physical goods and digital gift cards is vulnerable to mixed-cart fraud. Businesses that take no action risk chargebacks, lost inventory, and reputational exposure. Still, 81% of online businesses offer digital gift cards, and it’s likely that your e-commerce business is among them.
How can online businesses capitalize on digital gift cards without putting themselves at risk?
How can online businesses prevent mixed-cart fraud?
To prevent mixed-cart fraud, you’ll need a multi-layered fraud detection and prevention strategy. Most importantly, purchases that include digital gift cards need to go through a review process specifically designed to detect mixed-cart fraud. Fraud prevention company Chargeback recommends taking the following steps for best results:
1. Place limits on gift card value. For example, your business might only sell gift cards up to $50. The downside is that fraudsters may simply adapt their behavior and purchase three $50 gift cards instead of one $150 gift card.
2. Require manual reviews on all digital gift card purchases over a certain amount. This approach can take up a substantial amount of time, especially in the days leading up to gift-giving holidays, so prepare accordingly.
3. Consider using an email verification tool. Email verification tools allow you to determine if the email address has been in use for a prolonged period of time, or if it was newly created (a sign that the email address was creating solely for the purpose of fraudulently purchasing digital gift cards).
Don’t let the threat of mixed-cart fraud prevent you from unleashing the full potential of your online business. Digital gift cards are convenient, in-demand, and provide an easy-to-implement new revenue stream for your e-commerce site. A comprehensive and multi-faceted fraud detection and prevention strategy lets you enjoy all those benefits while reducing your risk of chargebacks.
How are you currently processing payments on your e-commerce site? To further secure your online business, make sure you partner with a credit card processor that has great customer service, proactive PCI Compliance support, and a knowledgeable representative dedicated to helping your business fight fraud and accept payments safely.
BASYS Processing as a business partner
Does your current processor understand the unique struggles of your industry? Do they provide great rates and personal customer service? Are they offering solutions to grow your business and being proactive about helping you reduce risk and increase your savings?
Contact BASYS today to learn more about innovative payment solutions that will save you time and money. We make accepting debit cards and credit cards convenient, safe and affordable.
BASYS Processing features:
• A friendly, live voice will answer the phone when you call; no automated phone systems
• In-house PCI Compliance team to walk you through the process step-by-step, improving security and reducing costs
• Accept payments in person, over the phone or online
• Next-day funding options
About BASYS Processing
BASYS Processing provides credit card and debit card processing services, plus solutions that include terminals, virtual terminals, e-commerce, mobile, and point-of-sale, customized to fit any need. Banks, associations, and software partners depend on us to strengthen their reputations and relationships with their customers by providing remarkable service paired with ultimate flexibility and pricing. Merchants depend on us to make accepting credit cards and debit cards convenient, safe & affordable. BASYS was founded in 2002 on one philosophy: to take care of our merchants, partners, and employees so they never want to leave. We are dedicated to working one-on-one with our customers to design the perfect solution. BASYS is Personal Payment Processing.
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