The Merchant Risk Council’s Vegas event covered everything from fraud detection technology to the future of payments. We asked Danny DiRienzo, GeoComply’s Sr. Director, Government Relations, and Isabella Edmonds, Government Relations Associate, to report back. Hint: Chargebacks and friendly fraud remain top concerns.
Q: What were your biggest takeaways from the conference?
DD: Everybody we spoke to at MRC recognized that geolocation is an important anti-fraud tool. But they rely on IP addresses as their source for location data. In my 25 years of law enforcement, I’ve learned that IP addresses are helpful for identifying a suspect after they commit a crime. But IP addresses are inaccurate and easy to manipulate, making them a poor data point for proactively detecting fraud. Worse, most of the people we spoke with didn’t know whether or not their IP data source recognized VPNs or proxies.
The optimal anti-fraud solution, of course, would be to use precision geolocation coupled with device-level screening. Short of that, an up-to-date IP-based solution that successfully detects the use of VPNs or proxies would be an upgrade to what most financial institutions currently use.
IE: Remaining competitive with incumbents like Amazon is critical to online merchants, especially since the pandemic. A premier user experience is everything; otherwise, merchants risk losing out to the bigger players. Yet, they must also provide a safe, trustworthy platform for transacting business. Anti-fraud solution providers have the challenge of creating a product that can both help merchants detect fraud earlier, while reducing (or not increasing) customer friction.
Q: What do you view as the most significant fraud challenges for merchants today?
DD: Payments fraud – whether that’s credit, debit, or account-to-account – is certainly the number-one concern. According to Juniper Research, online payment fraud losses will exceed $200 billion between 2020 and 2024.
Merchants are particularly worried about chargebacks and account takeovers. They’re trying to find ways to stop these costly crimes. Whatever the type of fraud merchants are dealing with, precision geolocation data can be a powerful anti-fraud tool.
IE: Definitely chargebacks and friendly fraud. Nowadays, fraudsters are not professional criminals; they’re existing customers who’ve passed KYC checks. And that’s a real challenge, because the chargeback process is long, tedious and involves a lot of parties – and is therefore costly. Estimates suggest that the true cost for a $100 chargeback claim is around $240.
True and unbiased geolocation that can be linked with order and delivery address provides merchants with ultimate compelling evidence when disputing chargebacks.
Q: Which was your favorite session that you attended – and why?
DD: An engaging roundtable by Salesfocrce and GoCardless made the case for account-to-account (A2A) payments, which intrigued me, given the inevitable demise of physical debit and credit cards. A2A payments will be the foundation of a truly global, purely digital economy. This underscores the need to establish digital trust among all participants in a cardless world.
IE: Ekata and GoFundMe co-hosted an excellent session on distinguishing between Gen Z and fraudsters. Members of Gen Z – including myself – often behave like fraudsters, even though we’re not! It’s just that we’re more skeptical about what we put online and with whom we share our data. For example, we don’t use our real phone numbers when shopping online, and this can create false positives.
That’s the problem with traditional KYC – how do you verify the identity for those of us who may not have a developed credit score, or who are excluded from financial services? The use of unbiased geolocation as part of digital identity can help fill the gaps and enable merchants to approve good customers while blocking bad actors.
You can win chargeback disputes! Watch our on-demand MRC webinar, Authentic, Accurate Geolocation Data: The Missing Piece in The Chargeback Dispute Puzzle, to learn how.