The COVID-19 pandemic has created a new reality for many businesses. And as businesses adjust to the changing times, criminals and other bad actors are adjusting as well – actively seeking ways to capitalize on the crisis.
So, what can payment facilitators do to help protect themselves and their submerchants from fraud and other types of risk in this environment?
In a webinar hosted recently by our partners at Infinicept, risk experts from across the payments industry discussed how the environment is changing and what payment providers can do in response.
Deana Rich, co-CEO and co-founder of Infinicept, hosted the panel discussion, which also included Timothy Miller, head of global credit and risk at Elavon; Madison Swofford, assistant director of operations at LegitScript; and Jeffery De Petro, SVP and chief administrative officer of merchant services for Esquire Bank.
The panelists agreed that the risk environment is rapidly changing, and that it may differ depending on where stores are located. Rich noted that a risk manager’s most important job right now is to stay abreast of the news – not just locally, but around the world – because varying actions being taken by different communities will have an impact on transactions and the patterns they might see.
“What is normal in one state might not be normal in another, so we need to understand all of that,” Rich said.
The panelists noted that both underwriting and transaction monitoring in today’s environment call for increased vigilance, as well as a possible return to what might be considered more “old school” techniques. While none of the panelists expected the industry to return to a time before frictionless underwriting and automation, they agreed that increased scrutiny and is necessary.
“While not completely closing the front door or the automation, [we are] providing some additional controls both up front and on the back side,” Miller said, noting, for example, that fraud teams had been digging more deeply into financials and watching accounts more closely after boarding to make sure they were processing as expected.
Swofford pointed out that the types of products that are seeing a surge of interest during the COVID-19 crisis – fake test kits and hand sanitizer for example – are creating an environment that is ripe for transaction laundering. She mentioned trends to watch for, such as accounts that are processing many transactions quickly or at the same time as other accounts, which could possibly indicate automated activity or clusters of fraudulent merchants.
As the environment evolves, it is now more important than ever to pay attention to information from card networks and regulatory agencies, and to share information with other risk professionals through industry forums, the panelists said.
De Petro also suggested that, as the situation evolves quickly with new information, it’s critical to pay attention to not only the data and the output from automated systems, but also gut feelings about what that information is telling you.
It’s important to ask, “Does it all make sense?” he said.
You can watch the webinar here.