UPDATE: How to Protect Against Fraud on Cyber Monday

Editor’s Note: The original article (posted below the line) was published on November 15, 2013. An update on the subject matter was sorely needed….

After the data breach debacles at Target and other major retailers this past year, staying safe from fraud on is still incredibly important, especially in the face of the biggest online shopping day of the year–Cyber Monday.

New technologies have provided a safe platform for transactions when choosing payment options this year. For instance, the new Apple Pay program provides an encrypted transaction through a trusted and secure third party, allowing for an extra layer of protection against potential breaches. In fact, most digital wallets are a great way to make secure transactions, making it harder for someone to steal your information.

Most major credit card issuers also have a wealth of tools at your disposal to make sure you’re safe this holiday season. By using fraud alerts or balance alerts, you can keep tabs on your cards and the activity that is going on them. Also, make sure you always pay “credit”, as opposed to “debit”, as it provides additional protection services from the card issuer.

As always, common sense is the biggest way to stay safe. Make sure you’re on reputable, secure sites and that you monitor your bank statements for any suspicious activity and your holiday shopping should go as smoothly as possible.

Original

Cyber Monday is the biggest online shopping event of the season. What merchants and consumers can do to prevent fraud:

Cyber Monday is perhaps the biggest online shopping event of the season. Cyber Monday falls on December 2nd this year and follows the ever-famous Black Friday.

Of course, no one wants to hear of the security pitfalls of online shopping, not to mention numerous charge-backs many financial institutions impose on merchants who provide eCommerce stores with the tools they need to serve online shoppers.

We had the privilege of catching up with Rey Pasinli, Executive Director of Total-Apps Inc. – a company that offers advanced payment gateway systems, to discuss some of the challenges facing online shoppers and merchants this holiday season. *Editors note: You don’t have to watch the whole video; click the anchor text following each question and jump to video clip pertaining to each question and answer*

Watch Rey’s full video response:

Cyber Security Tips

What do online merchants and online shoppers need to be aware of this holiday season, with regards to fraud? Is there a specific type of behavior merchants should watch out for during Cyber Monday?

The challenge is that the holiday season is when there’s the highest spike in credit card usage throughout the entire year.  And obviously with that usage comes a higher likelihood of somebody having their credit card stolen. So, if you’re a consumer and you’re going shopping you obviously want to be buying from secure websites, but even in the retail space we’re seeing a lot of credit card skimmers out there.  As a merchant it’s much more important to be able to look at the patterns that are happening. Watch Rey’s full video response HERE

What is a processing gateway and how can consumers tell if they are on a site that is encrypted, a site that won’t display their personal info?

Every website that is on the internet that is taking a credit card transaction has to be secure.  Those are the regulations and requirements.  Gateway is simply a private toll road that only the person with the toll pass can go drive on.  So it prevents people unauthorized access to the credit card networks.  As part of that security protocol, if you are shopping at a secure website you will see in your browser address bar it will start with https instead of http indicating that the page is secure. Watch Rey’s full video response HERE

What tips can you offer to protect credit card info online? Are there any tools available to consumers to help educate them on credit card security, with regards to shopping online?

From your side as a consumer be aware of your surroundings in who has access to your credit cards. A lot of restaurants are now moving to giving the waitress or waiter an iPod touch credit card machine so they swipe your card at the table.  They don’t leave your table anymore. A lot of fancier restaurants are going with Ipad based menu systems and checkout systems. And then there’s cool apps like Tabbed out (http://www.tabbedout.com).  It is emerging (the industry), it is getting better and not getting worse.  In the early 2000’s it was much more problematic than it is today. Watch Rey’s full video response HERE

What is a charge back? And how does it affect Merchant account service providers? More importantly, is there anything a merchant account service provider can do to prevent cancellations from occurring following Cyber Monday? What does Total Apps do differently to keep their clients happy?

As a cardholder I have the contractual right to dispute any credit card transaction that appears on my credit card statement.  That is the guarantee that was given to me by the bank that issued that credit card.  As a merchant, you’ve already provided the product/good service.  So not only are you dealing with the theft of your product, but you are also having to contend with potentially losing your merchant account because Visa and Mastercard rules are very specific.  You are not allowed to have a lot of charge-backs.  In the card association’s perception, they see that as you are a fraudulent merchant in the first place and we should ban you in prohibit you from ever processing credit cards again. Watch Rey’s full video response HERE

Supply and demand is a huge factor for any merchant during Cyber Monday. How does inventory management play into the charge back scenario? E.G, consumers order too much of a given product, the merchant sells out and clients are unhappy? Does that contribute to payment disputes?

This kind of stuff happens all the time.  Consumers buy a 100 units and it goes super viral and every teenager has to buy the latest and greatest, then all of a sudden Monday morning you have a 1000 sales; that is a disaster.  You will go to jail; that’s called Fraud. The FTC will show up, they will seize your bank accounts, they will lock away your house and take away your savings, it is that serious an issue.  So before you start going marketing like a mad man, you need to have those kind of controls in place.  A simple shopping cart has inventory control you can put a threshold in.  Some of the more sophisticated shopping carts will actually re-order your inventory and give that customer the option to say “Hey do you want to keep your order now or would you like us to send you a reminder when the inventory comes in stock”.