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ClearCommerce aims to squelch international credit card fraud
By Ellen Messmer AUSTIN, TEXAS - ClearCommerce has upgraded its online credit card fraud prevention software to better evaluate risks associated with accepting credit cards at e-commerce sites from shoppers outside the U.S. There is no silver bullet to prevent online credit card fraud, but e-commerce merchants typically try to automate fraud detection and prevention through homegrown or vendor software that evaluates risk according to dozens of variables, such as checking stolen card lists and the customer purchasing history. ClearCommerce has added what it calls "GeoLocator" to its fraud-prevention software, the ClearCommerce Engine, to pinpoint purchaser location and check the purchase order for known high-risk problems. "Fraudsters always use free e-mail accounts," says Julie Ferguson, vice president of emerging technologies and co-founder of ClearCommerce, which has 43,000 merchant users, including Sony and Apple Computer. GeoLocator adds a way for the ClearCommerce Engine, which runs on Windows NT or Unix behind the Web storefront, to identify the country where the purchaser's browser is located by analyzing the purchaser's IP address, she noted. See our related links Someone placing an order internationally using a U.S. delivery address presents a high risk of fraud, based on the experiences of several thousand ClearCommerce merchants, Ferguson says. ClearCommerce surveyed a sample 1,137 merchants, which provided insight on fraud patterns observed in 6 million Internet transactions over an 18-month period, to develop GeoLocator. ClearCommerce rates each purchase order on a scale of 1 to 100 in terms of low or high risk, advising rejecting or acceptance by the merchant. According to that sampling of customer data, the Ukraine, Indonesia, Yugoslavia and Lithuania are the countries that present the highest risk of credit card fraud to U.S.-based online merchants (see graphic, left), with fraud rates as high as 20%. The GeoLocator services takes into account the origination of the order and its overall fraud rate when evaluating the risk of accepting the Web order. Online credit card fraud is high in general, 18 times higher than that for in-store fraud, according to Ken Kess, a Gartner analyst. The merchant, not the Visa, MasterCard or other card association, typically carries the burden in covering the cost for goods obtained fraudulently online. Many e-merchants still develop their own fraud-prevention software or simply process the order manually after a review, Kess says. With support for international credit card fraud detection, ClearCommerce has upped the ante against its main competition, CyberSource, whose product doesn't have cross-border analysis, Kess says. But Kess says there's no foolproof way to prevent Internet fraud. "These tools all just look at patterns of behavior and gauge risk," he says. GeoLocator is available for a one-time fee of $7,500 with annual maintenance of $1,875. ClearCommerce: www.clearcommerce.com Related links Contact Senior Editor Ellen Messmer Other recent articles by Messmer Read about a study from the Internet Fraud Complaint Center (IFCC), a partnership between the FBI and the National White Collar Crime Center that says nearly 5% of all internet fraud comes from credit or debit cards. Apply for your free subscription to Network World. Click here. Send this article to a colleague
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