Velocity Checks: An Immediate Response to New Fraud Patterns

Over the past year, every successful attack turned into a chargeback costing merchants a fortune and leading to significant business losses. As eCommerce fraud evolves and becomes more sophisticated, the staggering amount of financial losses makes you understand how crucial it is to have an efficient security toolset in place to fight it. 

This is where velocity checks play a critical role in identifying risks and fighting nearly any type of systematic fraud. Monitoring the pace of buyers’ submissions and recurring patterns allow merchants to segment out suspicious transactions, identify cases in which a fraudster might be engaged in card testing or driving multiple transactions with a valid card. 

How does it work?

Fraudsters can purchase lost or stolen credentials and start testing them by submitting multiple orders to the same merchant. You do not want to be that merchant who ends up covering the losses as soon as cardholders discover the fraud and claim a dispute. 

Velocity checks were designed to scan the information submitted with each transaction and alert repeated submissions of the same information in a selected timeframe. Monitoring various types of transaction data, such as IP addresses, card numbers, device signatures, billing or shipping addresses, helps capture suspicious scenarios and prevent new fraud patterns. 

It is possible to track the number of transactions that have come from a single device in a certain timeframe or predict how many orders have been placed with a particular shipping address. Other attributes that are possible to track include email address, phone number, and credit card details. One attribute that matters would be an IP address since many legitimate users could be coming from the same IP. If you combine different attributes, that increases the chance to reduce the risks. It is crucial to monitor different measures of velocity scoring. 

FUGU strives to cover all possible threats and demonstrates great performance in velocity checks implementation when it comes to eCommerce post-payment security specifically. A great example from one of the biggest US-based retailers demonstrates it clearly: FUGU’s advanced security toolset detected repetitive payments from a certain district around Miami moving all payments to a pending phase. After deeper analysis, a breached credit card BIN was detected blocking 80% of the payments and validating the rest 20%. 

This example raises another important issue: 

Can it generate false positives and mark legitimate orders as a fraud? 

Exactly! What about “Kosher” transactions? What if merchants can lose legitimate customers due to overprotection? For example, if the above merchant decided to block all payments originated in Miami it would have resulted in a significant loss of valid business. The combination of FUGU velocity checks and our machine learning pattern detection algorithms allowed them to quickly find the root fraud origin and ensure minimal valid business decline.

So it is a complex fraud management strategy and you shouldn’t solely rely on it as a singular indicator. 

FUGUs response to a threat 

FUGU implements a 360° payment security approach and adds extra value to velocity checks by combining it with automatic post-payment KYC procedure, fully covering the merchant’s risks from possible threats leading to chargebacks. Instead of rejecting transactions, FUGU collects, evaluates, and uses the evidence required, completing the transaction in the most advanced way, helping hundreds of merchants worldwide. 

If you want to secure your payments, reduce risks, and increase conversions, 

GET IN TOUCH with our experts!

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