Top 5 Fraud Patterns that Risk Managers Should Watch Out For

Top 5 Fraud Patterns that Risk Managers Should Watch Out For

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by Bence Jendruszak

Fraud is always related to a purposeful intent committed by a human being utilizing techniques of deception and trickery. Fraudsters are constantly one step ahead of the game, therefore risk managers have to keep up with the most recent fraud patterns. We have collected five crucial scam elements that fraud managers should be aware of.


Fraudsters use VPNs or bad proxies

Fraudsters commit the primary error of using a VPN or a bad proxy connection throughout a transaction. They use these tools in order to mask their residential IP address, resulting in an anonymous connection. Not all VPN or proxy users are dishonest clients, therefore several other determinants have to be taken into consideration when analyzing a suspicious situation.

Fraudsters use email addresses with no history

Another major mistake that fraudsters tend to make is the use of an e-mail address that is rated to be risky. This means that the e-mail address in use lacks any related social media profiles, may be disposable or is blacklisted. Online customers tend to buy products using their personal e-mail address. This means that the address will be registered to at least a couple of social media websites and will most probably not be disposable. In the case of corporate addresses, checking the creation date of the e-mail address and verifying the domain are also relevant factors. Read more about email analysis here.

Fraudsters buy expensive products

Fraudulent users are likely to buy expensive electronic items that can easily be resold at a later time. Solid State Drives (SSD) and Apple products are generally of high demand in the carding community as they have a high resale value. Vouchers and gift cards are also among the most common digital products to be carded as they can easily be resold for digital currency on the dark net markets. Fraud managers should keep an eye out for these types of goods from popping up on the transaction lists.

Fraudsters spend too little time on the website

Ordinary consumers tend to browse online throughout their shopping experience. They read reviews, check alternatives before actually placing the order. On the other hand, fraudulent users know what they want and specifically place a single item in their shopping cart, the item that is later going to be chargebacked. Time spent on the website is certainly an important factor to watch out for when monitoring for fraudsters.

Fraudsters tend to commit a series of small transactions

After having bought or stolen a fresh list of credit card (CC) information, dishonest users have to make sure that their cards are actually functioning. Generally they validate this by conducting several low value transactions with different cards after one another. The low fees usually don’t trigger chargebacks from the legit account holders as the these transactions are not conspicuous. It is best to watch out for numerous low fee transactions taking place in a sequence.

Fraudsters are using sophisticated methods in order to harm businesses. This results in high manual review times and massive chargeback rates. Nowadays it is crucial for online merchants and payment service providers to rely on third party assistance in order to mitigate their transaction related risk.

The fraud management system of SEON enables online businesses to gain a deep insight into their transactional fraud patterns. It is vital for fraud managers to use a custom tailored risk scoring solution that enables them to improve their bottom line and boost their conversion rates. If you want to deep dive into the fraud analytics world, you could download our guide to fraud analytics in 2023.

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Bence Jendruszak

Bence Jendruszák is the Chief Operating Officer and co-founder of SEON. Thanks to his leadership, the company received the biggest Series A in Hungarian history in 2021. Bence is passionate about cybersecurity and its overlap with business success. You can find him leading webinars with industry leaders on topics such as iGaming fraud, identity proofing or machine learning (when he’s not brewing questionable coffee for his colleagues).

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