Fraud: Prevention tips from Visa

25. November 2020.

There have been more than 200,000 complaints of scams and fraud filed this year, according to a New York Times report. Data from the Federal Trade Commission reveals Americans have lost more than $145 million to fraud related to the coronavirus, with schemes peaking in the spring when consumers received stimulus checks and other forms of financial relief.

The data was compiled by the commission’s Consumer Sentinel Network, which provides law enforcement agencies and the public with information about rampant forms of fraud. The network has tracked about 206,000 reports of fraud, identity theft, spam telephone calls and other potential scams related to COVID-19 that were submitted to the F.T.C. from Jan. 1 through Sept. 22.

“The biggest challenges for financial institutions and merchants when it comes to fraud is that it happens fast and furiously,” Mike Lemberger, senior vice president and regional risk officer for Visa, North America, told this publication in a phone interview. “Fraudsters want more data and they are continually searching for ways to get that information faster. As people share their data [such as in an app] they do so often without thinking, and their data can be stolen or compromised before they even realize it.”

Lemberger works on the Visa Payment Fraud Disruption program which monitors merchants and banks in real-time for fraud and investigates if anything looks suspicious.

“We help our financial institutions and app creators by monitoring the platform. We also publish a lot of documents and best practices and we love it when people actually use our information. We recently put out a publication on how to buy online and pickup in the store which was becoming a big problem for merchant. When COVID-19 accelerated, a lot of people were driving up to big box electronic stores and yelling out confirmation numbers to store personnel to pick up computers and electronics. People were scared to get out of their cars, but basically anyone watching could have figured out that system wasn’t secure,” he said.

“You can yell out any number and take the merchandise before anyone realizes it has been stolen. When we realized fraud levels in pickups at the stores were going through the roof, we worked with merchants to come up with a better plan for customers to pick up their merchandise. That’s how the Visa Payment Disruption program works. When we see a spike in fraud, we act upon it and try to get ahead of it so fraudsters don’t get the opportunity to cash out.”

Q: How does this Visa program help prevent unemployment fraud?

A: We don’t exactly have a role in unemployment fraud when it occurs, but we do have a role when it enters the commerce area. We have a part to play and we work differently with different players. We look at patterns and irregular activity and work with government agencies to provide data and information for each state’s platform. We can see how they are onboarding or authenticating and who is applying for the benefits. We can help them secure their system, making it harder for fraudsters to get in.

Q: What do you mean you look for irregular activities and patterns to indicate fraud?

A:What happens when you see funds go into an account is you can see a pattern with what happens to the money. You can see how quickly it goes in and out of the account. Fraudsters often try and come up with ways to “launder” that money. A common way is to buy gift cards or electronics. Fraudsters will steal from an account and then go into a Walmart or Walgreens and buy several $100 gift cards and sell them online. If we start seeing a lot of $100 gift cards online, it’s a red flag for us.

Q: With the use of mobile apps accelerating, is the dark web something consumers using apps need to be aware of, in terms of fraud?

A: What you find as technology grows and people digitize, established banks or new banks with mobile apps sign up customers so they can do their business digitally. When someone signs up for an app, they instantly provide access to their information. What we’ve seen is [fraudsters] use the dark web to gain that information. They may have gained access a year or two before, but they hold on to it, waiting for the perfect time to use it. And when they do, although the app is legitimate, they can easily breach the data and cause fraudulent activity.

Q: You talk about fraudsters cashing out. How do they do it?

A: What you find is as technology grows and people digitize, consumers expect instant access through apps. Everything is digital and to provide instant access, you are turning over your information every time to potential fraud. This is when fraud can occur. Apps give you instant credentials and you can pay for something immediately and open up an account in a digital format. You can pay for food, rides, merchandise and transfer money all through an app. If a fraudster gains access to your data, they can use your account for fraudulent purchases or to gain access to cash. People don’t realize how important it is to understand how the app is handling your data to avoid a data breach.

Q: How do criminals avoid detection?

A: The key to avoiding detection as a fraudster is speed and organization. A fraudster knows that in striking, it’s a volume game. The higher the volume, the more they can grab and the more they can grab, the more they can sell. It’s about being quick and organized so they can attack an entire network before they are detected. And most people don’t realize fraudsters are very organized. They act fast and move on quickly.

Q: What are tactics to help avoid fraudsters attacking?

A: Keep data encrypted and secure. Remember it may be a lot of work to monitor for fraud, but it’s worth the effort. Fraudsters are getting more and more sophisticated and malware is playing a bigger role in collecting data. You want to be sure that any company handling your data is cyber secure.

Q: What is the most common mistake companies make in regard to fraud?

A: They don’t pay attention to spikes or patterns in purchasing. They don’t understand how quickly and easily fraud can occur. Recently, we saw a big shift in card-not-present purchases. We jumped on it immediately but if a company sees a spike in one area, the [fraudulent] buying online can happen quickly and they need to immediately pay attention to that spike and act accordingly. And working with an experienced company in fraudulent activity, like our team, is important in order to keep customers safe and secure. As a B2B company the security of our platforms and the dedication we provide is instrumental in keeping our customers safe and disrupting fraud when it occurs.

Q: How successful has Visa Payment Fraud Disruption program been to date?

A: We’re constantly working with financial institutions and merchants, and whenever we see a pattern that causes concern, we contact them and go over their own data to see if fraud has occurred. And financial institutions are getting smarter using algorithms, authentication and authorization. We continue to work with them and together we share data and address any issues. It’s been a great partnership.

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