Credit Card Fraud Techniques: How to Identify Them & Keep Your Business Safe
Technology is developing at an unbelievable pace. As our technology develops, so do the gaps in security measures, leaving many businesses and individuals vulnerable to credit card fraud. The reality is that, according to a study done by Kount, a staggering 40% of all financial fraud is related to credit cards. What’s even more shocking is that this translates to $5.55 billion worldwide! There are various techniques that you and your business can adopt to avoid credit card fraud, and stop those devious fraudsters in their tracks. In this blog we look at some of the most effective detection techniques you can use to safeguard your hard-earned moola.
6 Different Types of Credit Card Fraud Techniques
These are some detection techniques that can be used to detect credit card fraud:
Bagging Ensemble Classifier
This technique improves on machine learning algorithms. It is popular because it is fast, offers increased accuracy, can handle large databases, and is simple to implement.
This technique uses decision tree logic. It works by using a similarity tree, which is outlined with nodes and leaves with attributes and factors, created through decision tree logic.
K-Nearest Neighbor Algorithms
The KNN technique performs pattern recognition and statistical estimation. As an instance-based learning method, it compares new instances with original instances.
Genetic (and Additional) Algorithms
This predictive method includes detection techniques using genetic algorithms. The algorithms establish rules that are based on logic, which then categorize data as suspicious or non-suspicious to highlight suspicious transactions.
Naive Bayes Classifiers
This technique uses a dataset with target classes that are known to make predictions of future instances.
Support Vector Machines (SVMs)
This technique is a statistical learning method. If the test instance falls within the learned region, it is seen as normal. On the other hand, if it is outside the region it is seen as anomalous.
How to Prevent Credit Card Fraud
When it comes to a business, education is the key. Know the different methods used by fraudsters and protect your business against these methods before it is too late. It is also critical for businesses to keep their customers’ information secure at all times to avoid damaging data breaches. Here are other ways to prevent credit card fraud:
Review your monthly statements carefully and regularly
- Fraudsters don’t need a physical card to commit credit card crimes. By reviewing your statements regularly, you’ll pick up on irregularities quickly.
Limit access to business cards
- The bigger the circle the bigger the opportunity for fraudulent transactions to slip through the cracks.
- And do this on a regular basis
Use wallets with built-in strip-reader protection
- You can also request an EMV chip card to stop fraudsters from using skimmers to collect data from the magnetic strip of a credit card.
- Implement MasterCard and credit card detection software
When it comes to e-commerce, credit card fraud is also rife. There are many causes of e-commerce fraud that you need to protect yourself from. Get to know the different types of e-commerce fraud, as well as e-commerce chargebacks – fighting credit card chargebacks can be frustrating and time-consuming for any business owner. Prevention, as they say, is much better than cure!