A cybercrook attempting to purchase online products with fake credit cards or under a phony name likely would not be able to hide from a Retail Decisions Ltd. fraud-protection upgrade designed to enable merchants to know where their online shoppers are located, the fraud prevention consulting and payment processing firm announced Nov. 28.
London-based Retail Decisions has added Internet Protocol address geolocation technology to its ReD Shield fraud-protection program, the company stated.
By knowing where consumers are located when placing orders, merchants can more easily delay or deny transactions deemed potentially fraudulent, Erika Gallo, Retail Decisions director of global risk management, tells PaymentsSource.
When the consumer goes to the checkout page of a merchant website to purchase a product online, the ReD Shield automatically looks up the IP address and retrieves the registrant’s physical location, Gallo says. The consumer does not know the geolocation process takes place, but the policies portion, or “fine print,” on the checkout page explains the merchant is obtaining information about the location of the consumer’s computer, she says.
After establishing a “fingerprint” of the consumer’s computer, ReD Shield alerts the merchant in seconds either to delay or deny a transaction by matching the consumer-computer information with established fraudulent tendencies or locations, Gallo says.
“This is another tool in the toolbox for merchants as a way to frustrate fraudulent consumers,” Gallo says.
The service appears to be similar to one offered by LexisNexis (
Using geolocation to detect consumers using false identities or fake credit cards to purchase products or services has become more complicated because mobile payment devices trigger various locations for a legitimate consumer, Gallo suggests.
“Highly mobile consumers can take on the characteristics of fraudulent behavior because they may buy products through different servers on their mobile device, or use computers at their workplace,” she says.
When customizing ReD Shield geolocation for a major retailer, Retail Decisions attempts to avoid a significant number of “false positives” triggered by mobile consumers by establishing a “fraud-review model” that more clearly reveals abnormal buying behaviors, Gallo says.
If a transaction matches the program’s fraud criteria, ReD Shield issues a “deny” message to the merchant, who in turn informs the buyer that the order has been denied or delayed while providing a phone number to obtain more information. Most often, an employee of the merchant reviews potentially fraudulent orders because “they know their regular customers better than anyone,” Gallo adds.
Fraudsters seek ways to get around the defenses by placing phony orders and viewing the “deny” responses they receive, she says.
After deciphering the responses, fraudsters try to hack into the system and “reverse-engineer the rules” to neutralize or change them, Gallo adds.
Merchants selling electronics or digital products tend to be the most frequent targets of fraudulent consumers, Gallo warns.
“The tools and services to detect and thwart fraud have been available for some time, but they continue to evolve and advance,” she says. “It continues to be all about developing a multi-dimensional approach to fraud resolution.”
Retail Decisions estimates merchants using the upgraded ReD Shield can increase online transaction success by 30% to 50% by thwarting fraud and by not denying sales that appear suspicious but actually are legitimate, the company noted in a press release.
Geolocation fraud prevention devices are good tools for merchants, but consumer fraud has become a big business and the fraudsters continue to get more sophisticated with their plots, Julie Conroy McNelley, senior analyst and fraud expert with Boston-based Aite Group, tells PaymentsSource.
“The fraud prevention Retail Decisions provides is very helpful, and banks have been using the geolocation tools for a long time,” McNelley adds. “Nothing is fool-proof, but it is very sophisticated and it makes it hard for the fraudster.”
The ReD Shield upgrade is available in all markets in Europe and the United States, the company stated.
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