Know the Enemy: What Merchants Can Learn From Fraudulent Behavior

Fraudsters Pay With Style
You might think that elite cards would be safer than ordinary ones, but actually it's the other way around. Although elite cards are rarer and cost more on the black marketplaces, criminals often feel that it's worth paying extra as these cards have higher credit limits (i.e., access to more money), which means that their potential for maximizing a fraudster's bottom line is greater. Never forget that fraudsters are rational actors — it's all about the money.

More specifically, retailers shouldn't be lured into a false sense of security when they see an elite card. For example, a "black card" from American Express might project prestige, but it also comes with fraud rates that are 2.5 times higher than the rates associated with standard cards.

The Bottom Line
The overall takeaway for merchants is simple: Preventing fraud means combating professional criminals who are supported by a sophisticated criminal ecosystem. To succeed in protecting your customers and business, you must deal with this challenge in a similarly professional manner and always stay in the know.

Fraudsters are fast, agile and always have an eye on their bottom line. Retailers might feel as if they're always racing to keep up and educate themselves, but the cost of falling behind might be too high.

Alon Shemesh is the co-founder and chief analyst of Forter which provides a decision-as-a-service fraud prevention solution for online retailers.