Order Verification FAQs - FraudGuardian
What is a fraud score?
Why is an accurate IP address so important?
What about AOL IP addresses?
Why is the email domain required?
Why does an anonymous proxy affect the fraud score so heavily?
What is the BIN (Bank Identification Number)?
I have a fraud score, now what?
What if the BIN number is not available?
I just started my business, should I use FraudGuadian?
I already do my own fraud screening, why should I use FraudGuardian?
What are the fraud stats and what is a fraud cluster?
What is a fraud score? top
The fraud score is an estimate of the risk level when accepting online credit card orders. The score is based on a 10 point scale, 0 (low risk) to 10 (high risk), and is calculated using the information you send via the FraudGuardian API. The key to an accurate score is the IP address where the order originated from. The IP address can then be used to compare against the location of the billing address and BIN address. Other factors are taken into considerations as well; detecting free email addresses, detecting anonymous proxies, calculating the distances between all locations, etc… all of which affect the fraud score.
Why is an accurate IP address so important? top
The IP address is used to match up the billing address of the card holder with their actual physical location, determined by examining their IP address. FraudGuardian will calculate the approximate distance between their location and the credit card billing address, as well as country where they are present.
Note: The IP Address to Location database is sometimes inaccurate or incomplete, and the card holder could be traveling or using a business card from company branch located in a different city or even country. Therefore we consider a country mismatch or a large distance to be a yellow flag.
What about AOL IP addresses? top
Many users around the world use AOL to connect online. AOL IP addresses are broken down between the United States, Great Britain, France, Germany, Japan, and Brazil.
Note: Some French AOL users appear to come from Great Britain or Germany due to the way that AOL routes their traffic through proxy servers.
Why is the email domain required? top
Many credit card fraudsters use a free e-mail provider such as hotmail.com or yahoo.com to attempt to become anonymous. Of course many legitimate clients use free e-mail as well, so this is just another yellow flag. The fraud report will attempt to do a whois lookup on the email domain in order to provide you with more fraud detecting information.
Why does an anonymous proxy affect the fraud score so heavily? top
One of the ways a credit card fraudster can evade attempts to track them down is to use an Anonymous or Open Proxy. These proxies hide the true location of the client. The analogy in the real world would be if somebody walked into a bank wearing a mask. We recommend treating Anonymous and Open Proxies as red flags. We have noticed a high number (perhaps 40%) of our fraudulent purchases come from Open Proxies, and it is known that organized credit card fraud rings use Open Proxies.
What is the BIN (Bank Identification Number)? top
Many international credit cards don't support address verification. Checking the BIN or Bank Identification Number provides a way to see if the issuing bank for the credit card is in the same country as where the card holder is resident.
Note: The BIN is only applicable to VISA and MasterCard. Also, legitimate users sometimes do use a credit card from another country so this is considered to be a yellow flag.
I have a fraud score, now what? top
The fraud score should be considered as one more tool in your fraud fighting arsenal. Each order you submit will be scored on a 10 point scale and it is ultimately up to you to decide what level of risk you are willing to accept.
Note: The fraud score itself is only an estimate based on the data you provide. There is never a 100% guarantee that a low score is valid or that a high score will be fraudulent. On a scale of 0-10, you choose your own threshold. While false positives are rare, they do occur from time to time for legitimate reasons.
What if the BIN number is not available? top
If you accept non credit cards orders or a customer is using a credit card other than Visa or MasterCard, you will not have access to a valid BIN number. Even without a BIN number, FraudGuardian will still generate a fraud score; however the BIN score will not be used to determine the overall fraud score.
Note: The fraud score will have more validity if the BIN score is part of the calculation.
I just started my business, should I use FraudGuadian? top
In 2002, internet fraud cost business world wide over 15 million dollars in losses! If you accept online orders for your products or services, inevitably you will receive some percentage of fraudulent translations.
FraudGuadian is a tool which will give you an edge in the fight against internet fraud. Keep in mind that fraud causes charge backs, and charge backs not only cost you money in fees but also lost goods. Charge backs may even lead to loss of your merchant account if you have too many!
With FraudGuardian, you can help protect yourself from charge backs by using the fraud score to weed out the fraudulent orders before they come back to hurt your bottom line.
I already do my own fraud screening, why should I use FraudGuardian? top
First, if you are already doing your own fraud screening or have hired staff to do it for you, congratulations! However, as you may know by now, doing fraud screening manually still costs you time and resources that you could probably use elsewhere in your business. With FraudGuardian, a fraud score can be generate in seconds, anytime of the day or night!
What are the fraud stats and what is a fraud cluster? top
With each fraud score calculated by FraudGuardian, the score and location is saved for statistical purposes. These stats allow us to show "fraud hot spots" or "fraud clusters" by domain and by country. As this data grows, we will be able to return additional statistical information to you via the FraudGuardian API.
You will also be able to login to the member's area and view your OWN fraud stats and "fraud clusters" showing you exactly where your customers are coming from!
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