A brilliant way to cut down on card fraud

prelin —  March 21, 2013 — Leave a comment

U.K. based Tuxedo Money Solutions was having major issues with fraudulent transactions.

credit-card-onlineOne of Tuxedo’s most popular offerings enables consumers to add value to their prepaid cards online via a credit or debit card without having to link to a bank account. However, the site soon became a target for criminals who would use stolen payment cards to add value to prepaid cards, the company says. Criminals have long been attracted to the anonymity of prepaid cards and often use them in money laundering schemes.

The company says it was at risk of incurring fines from card companies and was added to a merchant watch list because of its high rate of chargebacks.

Tuxedo in desperation turned to fraud prevention and payment services vendor ReD Worldwide for help. What makes the service interesting is that it draws on a multi-merchant database of both legitimate cards that have been used for successful purchases and stolen cards that, for example, have been tied to chargebacks. It also uses databases of lost or stolen payment cards, IP geo-location and device IDs to recognize suspicious transactions. Users making transactions in unusual locations are flagged as suspicious.

The service also enables clients such as Tuxedo to review transactions and see why they were accepted or denied and manage or change fraud-screening rules and cross-check names, addresses and phone numbers registered with payment cards with the information the consumer enters.

Fraudulent transactions now represent less than 1% of its sales and the web is now one of the most popular ways for prepaid card users add value, with consumers adding $1.5 million per month to their prepaid cards via Tuxedo’s site, the prepaid card provider says.

It’s always fascinating to see how technology makes such a difference in the fight against fraud.


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