Online Fraud

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The term "online fraud" covers all types of internet fraud schemes that use e-mail, websites, chats, forums to present fraudulent solicitations to potential victims, to conduct fraudulent transactions or to transmit the proceeds of fraud to financial institutions or to other connected with the scheme.

There are a lot of types of online fraud: identity theft, pharming, phishing etc.

The most harmful sort of online fraud nowadays in credit card fraud.

Credit card fraud is one of many forms of fraud involving credit cards, charge cards, debit cards, or prepaid cards.

Merchants all over the world suffer much from this kind of online theft.

There are some methods of combating credit card fraud. They are:

  • AVS checking,
  • CVV code checking,
  • verification by IP address,
  • VoIP telephone authorization etc.

Telephone Authorization Service Based on VoIP

The main problem in combating credit card fraud is to verify whether card details entered by e-shop’s client are in fact client’s details. Implementing a simple script provided by company specializing in offering such services (e.g. in shopping cart of almost any online shop, allows merchant to initiate a VoIP call to merchant’s client within payment routine.

Implemented script generates a random number and shows it to merchant’s client and instantly initiates VoIP call to client’s phone number that he or she entered while going through the payment routine. When connected, client prompted to enter number that he or she sees on display using telephone keypad. By entering correct number, client proves that phone number provided in payment routine is in fact his or her phone number.

This simple routine takes no more than one minute and allows merchant to make sure that details entered by his client are correct, therefore making it impossible for card fraudsters to use merchant’s payment routine. Here we can face a situation described above - fraudsters can get hold of anonymous phone (cell phone, Skype etc.) number and provide it in merchant’s payment routine. But we must remember that city code of this phone number must correspond with client’s address and with client’s IP geographical location. Also, client’s telephone number can be checked against special telephone database that identifies phone number type. Depending on merchant’s preferences such phone numbers can be declined or marked as potentially fraudulent.