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A small transaction might not seem like a big thing to a merchant.
However, that small transaction may be a fraudulent case of stolen credit card information being used to determine whether the card is valid. The fraudster knows the card can still be used if the transaction goes through. The merchant is at risk.
Valid stolen card information leads to bigger fraudulent purchases that can damage a business when transacted in bulk. It can also lead to excessive chargebacks that can mean denial of credit card services entirely.
There are many implications to card testing fraud. You must know how to handle them to protect yourself and your business.
Let’s talk about how to protect yourself from credit card testing fraud.
What is Credit Card Testing Fraud?
Credit card testing fraud means testing the validity of stolen credit card information.
Also known as card testing, fraudsters commit card testing intending to use or sell the validated card’s stolen information in the future.
Here’s how it typically works:
Acquisition of Stolen Card Information
Credit card information can be stolen or obtained in various ways.
- Phishing attacks
- Data breaches
- Skimming devices
- Purchase from the dark web
Small Transactions
The stolen credentials are used to make small online transactions, which are less likely to trigger fraud detection systems.
Websites most vulnerable to card testing provide immediate feedback on card validity.
- Donation websites
- Small e-commerce sites
- Online gaming
- Digital subscriptions
Validation
A successful small transaction confirms the card is active and hasn’t been reported lost or stolen. Once validated, the card information is ripe for further abuse.
Larger Fraudulent Transactions or Resale
Validated card information can be used for larger and more fraudulent transactions. Also, the card details can be sold on the dark web for more than unvalidated card information.
Card Testing’s Impact on the Cardholder and Merchant
Card testing poses a severe threat to both cardholders and merchants.
Cardholders face increased unauthorised transactions and identity theft that can drain their resources.
Merchants suffer chargebacks, lost merchandise, and reputational damage. It’s not only expensive but threatens the business as a whole.
There is a way to fight back.
How to Protect Yourself and Your Business
A multi-layered approach to fraud protection is best. Create a strategy combining technology, vigilance, and industry best practices.
To combat card testing, many businesses employ advanced fraud detection systems that look for patterns indicative of fraudulent activity, such as multiple attempts from the same IP address, rapid succession of transactions, and transactions with unusually small amounts.
Our service, ChargebackStop.com, is one of these systems. ChargebackStop integrates with industry-standard detection and prevention platforms, creating an easy-to-use and understood dashboard that the merchant controls.
ChargebackStop is automated and allows the merchant to review and choose the best way for the business to respond to the situation.
Use Address Verification Service (AVS)
One sign of fraudulent activity is a mismatch between the cardholder’s billing addresses. If the address given during the transaction differs from that on record with the issuer, this is a red flag.
AVS (Address Verification Service) automates this address comparison and sends notifications of possible fraud.
Employ Card Verification Value (CVV) Checks
CVV (Card Verification Value) checks the validity of the three or four-digit code on the back of the card.
CVV codes are not stored in online databases, making them less likely to be stolen. A notification is sent if the code is incorrect or missing.
Implement Fraud Detection Software
Sophisticated, intelligent fraud detection and prevention software is a wise investment. It analyses transaction patterns and notifies the merchant of unusual activities.
Monitor for Suspicious Activities
Some fraud warning signs include:
- Multiple declined transactions
- Small, rapidly placed transactions
- Multiple orders with different cards but shipping to the same address
Set Velocity Checks
Velocity checks limit the number of transactions allowed per card or IP address in a given timeframe. This can prevent multiple attempts to test stolen cards.
Use CAPTCHA on Payment Pages
Implementing CAPTCHA can eliminate automated bots from testing card numbers on your website.
Did You Know? CAPTCHA stands for Completely Automated Public Turing test to tell Computers and Humans Apart. ReCAPTCHA, prominent on the web, is just one implementation of CAPTCHA owned by Google.
Limit the Number of Declined Transactions
To deter fraudsters from using your site to test cards, implement a transactions block after reaching a set number of declined transactions.
Use a Secure Payment Gateway
Partner with a secure payment processor offering robust fraud detection and prevention tools.
Top payment processors include:
- Stripe
- Paypal
- Square
- Authorize.net
- Braintree
Manually Review Suspicious Orders
Platforms like ChargebackStop.com automatically alert you to suspicious orders. Once notified, you can choose how to handle the matter. Just click on the appropriate method, and CBStop will take care of it.
You Can Protect Yourself from Card Testing Fraud
Merchants can significantly reduce the risk of falling victim to credit card testing fraudsters.
NOTE: It's important to balance security measures with customer convenience to ensure that legitimate transactions are not negatively impacted. If done correctly, your business’s reputation will flourish, and you’ll save money as well.
Looking Forward
Using these measures, combined with an automated chargeback protection system like ChargebackStop, you can reduce your levels of fraud and decrease chargebacks by up to 99%.
We are here to answer your questions concerning credit card testing fraud, automated chargeback protection, and anything else brought up by this article.
Visit ChargebackStop.com for contact information and to sign up for a free demo.
FAQ: Credit Card Testing Fraud
What is credit card testing fraud?
Credit card testing fraud involves cybercriminals using stolen credit card information to make small transactions, testing if the card is active and not reported as stolen.
How can I detect credit card testing fraud?
Look for small, unusual charges on your statement, especially from unfamiliar vendors. Multiple small transactions in a short period can also be a red flag.
What should I do if I suspect credit card testing fraud?
Immediately contact your credit card issuer to report the suspicious transactions. You can also use an automated fraud detection system to reduce the chargebacks associated with card testing. ChargebackStop.com specialises in this.