How Payment Fraud Threats Are Evolving

payment fraud

payment fraud affects companies of all sizes, but it’s especially costly for small businesses and merchants. The costs can include chargeback fees, merchandise distribution, fraud investigation, legal prosecution and software security.

The world of payment fraud is evolving rapidly. New payment services and technologies are opening doors to new fraud threats. Fraudsters are adapting and scaling their attacks to take advantage of organizations that aren’t prepared.

Identity Theft

Fraudsters steal the personal and banking details of someone else, then use this new identity to make purchases and conduct transactions online. These attacks can be simple phishing scams, or more sophisticated data breaches.

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The number of fraudsters creating new accounts and using them to launder funds continues to grow, requiring banks to adopt processes to manage these suspicious accounts and close them down before they can be misused. Banks and PSPs need to adopt a 24×7 fraud response instead of taking days to investigate suspicious payments alerts.

Friendly Fraud

The highest percentage of merchants’ losses come from “friendly” fraud – when the customer who made a purchase disputes their charge, often saying the item was damaged, not delivered or never ordered in the first place. This type of fraud isn’t always easy to spot, but it can cause merchants a huge amount of pain in the form of chargeback fees and lost sales.

Radar for Fraud Teams, is a set of fraud-fighting tools built directly into Stripe that can detect patterns across your business’s payments and assess the risk of each one. It also includes a review feature that places payments into a review queue, so you can take a closer look at them before they’re processed and charged.