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Fraud Prevention

Effective fraud prevention requires layered strategies combining authentication, verification, and monitoring.

Key Prevention Methods​

Authentication​

MethodProtection LevelUse Case
3D Secure 2.0StrongAll CNP transactions
Multi-Factor AuthStrongAccount access
BiometricsStrongMobile/app transactions

Verification​

MethodProtection LevelUse Case
AVSMediumAddress verification
CVV/CVCMediumCard presence
Email verificationMediumAccount validity
Phone verificationMediumIdentity confirmation

Monitoring​

MethodProtection LevelUse Case
Machine learningHighPattern detection
Rules-basedMediumKnown patterns
Velocity checksMediumUnusual activity
Manual reviewVariableHigh-risk orders

Authentication Deep Dive​

3D Secure Implementation​

The most effective fraud prevention tool for CNP transactions:

  • Visa Secure - Visa's 3DS brand
  • Mastercard Identity Check - Mastercard's 3DS brand
  • American Express SafeKey - Amex's 3DS brand
  • Discover ProtectBuy - Discover's 3DS brand

Key benefits:

  • Liability shift to issuer on fraud
  • Reduced fraud chargebacks
  • Better customer authentication

Prevention by Fraud Type​

Third-Party Fraud​

PreventionEffectiveness
3DS authenticationHigh
Device fingerprintingHigh
Velocity rulesMedium
AVS/CVV matchingMedium

Friendly Fraud​

PreventionEffectiveness
Clear descriptorsHigh
Order confirmationsHigh
Delivery confirmationHigh
Pre-billing alertsHigh

Account Takeover​

PreventionEffectiveness
MFA on loginHigh
Device recognitionHigh
Behavioral analyticsHigh
Session managementMedium

Layered Defense Strategy​

Key Metrics​

MetricTargetDescription
Fraud rateunder 0.5%Fraud CBs / Total transactions
False positive rateunder 3%Good orders declined
3DS frictionless rateover 80%Frictionless auth / Total 3DS
Review rateunder 5%Orders needing manual review

Vendor Landscape​

See Fraud Vendors for third-party solutions.

Next Steps​

Just starting fraud prevention?

  1. Enable 3D Secure - Biggest impact, liability shift
  2. Implement AVS/CVV - Basic verification layer
  3. Set up velocity rules - Catch obvious patterns

Optimizing existing prevention?

  1. Review fraud metrics - Know your rates
  2. Tune risk scoring - Balance fraud vs. friction
  3. Evaluate vendors - Consider specialized tools

Experiencing a fraud attack?

  1. Follow the playbook - Emergency response
  2. Increase friction temporarily - Slow down attackers
  3. Enable 3DS challenge mode - Maximum authentication