COVID-19 and the current fraud landscape

May 29, 2020
4 min
Cybersource Team
Cybersource Team
Global Experts

The payment and fraud landscape is almost unrecognizable today due to the COVID crisis. Businesses must rapidly respond to new fraud threats, drops or surges in order volume and new government policies—all while possibly working with a depleted workforce. As a result, fraud rates for some industries have increased as fraudsters attempt to exploit vulnerabilities in screening.

Fraudsters are testing merchant’s accounts to see which ones have opened the door the widest. Here are some common cases:

  • With the economy facing tough times, fraudsters likely know some businesses may be inclined to remove or adjust any perceived barriers to sales, giving them more opportunity to take advantage of weaknesses.
  • Manual fraud review teams could be under staffed and might move to accept/reject models or relaxed rules.
  • Card testing in particular has risen dramatically. In these attacks, fraudsters program botnets to run thousands of transactions on a merchant’s site to “test” the validity of card details. As a result, a number of merchants have seen authorization rates impacted.
  • Machine learning and AI models were not built with COVID-19 in mind, so you may see a number of false positives during this period. You can expect these models to eventually recalibrate to COVID-related fraud trends. However this will take time, and it could be time you cannot afford to lose.

For many businesses, review and reject rates have increased significantly. In part this is due to the payment ecosystem seeing fewer genuine customers than before. Fraud to sales ratios have spiked as less genuine orders are being processed, even if the same amount of fraud is going through the system. A greater number of merchants are now exposed to excessive dispute programs if they are unable to reduce these rates.

What can you do to protect business during uncertain times?

With this unprecedented fraud landscape, you need to quickly evaluate new risk strategies without jeopardizing the payment experience your current customers enjoy. With Decision Manager Replay, you can test different what-if fraud strategies against your historical transaction data in real time. This lets you rapidly assess the impact of rules changes on your risk management strategy before putting them into production. As a result, you can more quickly identify the best rules changes to implement in your live environment.

If you need additional help evaluating your fraud management strategy, our Managed Risk Analysts work across multiple industries and regions to stay in-tune with the latest tactics and approaches—providing the insights and expertise to help during this time of crisis.

The upcoming months will be critical as fraudsters attempt to exploit this new window of opportunity. It is crucial that merchants do not to blink at this time but proactively monitor and adjust their risk plans.

Learn more about Cybersource's Decision Manager fraud management platform and Managed Risk Analysts.