The Simility Blog

Addressing CNP Fraud to Reduce Chargebacks and Protect the Bottom Line
Jayan Tharayil
May 16, 2019

Digital businesses are adopting innovative measures to offer differentiated customer services and make the online customer journey as seamless as possible. Offering multiple online payment options is one such mechanism that businesses use to make payments convenient for customers and close more checkouts. Fraudsters misuse this convenience to orchestrate various types of financial fraud that hurts businesses and customers alike.

In the Fight Against Card-Not-Present Fraud

To make online purchases using credit cards, customers need only key in their card details. Using stolen credit card details and other personally identifiable customer information—harvested from data breaches—fraudsters abuse online business platforms for card-not-present (CNP) fraud, resulting in financial losses for businesses due to mounting chargebacks.

For instance, Republic Wireless, a wireless network provider in the US was facing CNP fraud on its e-Commerce platform. Fraudsters used stolen credit card details to buy phones and data/voice plans from the company’s online platform. As the business grew, the lack of automation led to the company’s fraud analysts spending disproportionate amounts of time manually reviewing online transactions. By the time, the provider’s fraud-fighting team could detect the fraudulent transactions, it was too late. Defrauded customers would dispute the transactions and Republic Wireless was left to absorb the losses accruing from chargebacks, which adversely impacted the bottom line.

Republic Wireless had a legacy fraud prevention solution that was neither flexible nor effective. With every new data set added to the system, the company’s fraud analysts were not able to customize the solution in-house, which made Republic Wireless dependent on the external vendor.

Similarly, many digital businesses either lack the capabilities or have legacy solutions that fail them in their fight against fraud. Businesses lose valuable time and money on manual reviews. Despite exercising the greatest care, human errors may creep in that allow fraudsters to sneak into the business environment. In a bid to prevent fraud, reviewers often quarantine genuine transactions as well. This leads to greater customer friction, and unhappy customers may choose to switch providers, resulting in not just a loss of business, but also damage to the brand.

To strengthen fraud prevention capabilities, digital businesses should invest in advanced, data-driven solutions that can help detect fraud in real time and prevent it from making headway into a business’ environment. Such solutions can automatically review and red-flag fraudulent transactions to help businesses enhance operational efficiency while ensuring secure and seamless transactions for genuine users. Since fraudsters are continually upgrading their skills to orchestrate more sophisticated and complex attacks, businesses need the ability to adapt to evolving fraud.

Simility’s Proven Expertise in Nailing Down Fraud

Simility, a PayPal service, helps global businesses efficiently fight fraud, including CNP, with its end-to-end fraud prevention solution—the Adaptive Decisioning Platform. With the ability to apply advanced artificial intelligence and machine learning models to volumes of structured and unstructured data from multiple sources, the Adaptive Decisioning Platform can help reduce manual reviews, lower false positives, and are designed to detect patterns indicative of fraud even before they are perceptible to humans.

Republic Wireless deployed Simility’s Adaptive Decisioning Platform to address its biggest challenges—manual reviews, chargebacks, and external dependence. With customized models and inbuilt automation, the company was able to address all of its challenges successfully.

Read the full case study, or schedule a demo to learn more about the Adaptive Decisioning Platform.