Ecommerce Fraud Prevention: Advanced Fraud Protection Features in Magento

According to a recent study by Javelin Strategy & Research, ecommerce vendors lost $16 billion in 2016 in the U.S alone, with worldwide CNP fraud losses expected to top $71 billion by 2022.

In recent years, the type of ecommerce businesses that have been targeted by fraudsters have included:

• Sites selling airline tickets and other travel products
• Online clothing retailers/distributors
• Sites selling digital content such as online gaming subscriptions
• Online stores selling electronics
• Sites selling luxury items such as high-end designer handbags, fine jewelry, and watches

Typically though, fraudsters tend to target sites selling items which can be resold quickly or which can be returned in-store for cash, although sometimes they also focus on travel related or digital items for their own use.

If you’re a Magento store owner you should be aware of these trends and practices and should have the necessary fraud detection and risk assessment tools and extensions installed on your store, so that your web store is protected against such attacks. And it’s easy to do since there are many fraud detection solutions available for Magento like:

• Maxmind Fraud Prevention
• FraudLabs Pro Fraud Prevention
• Kount Fraud Prevention
• Signifyd Fraud Prevention

In this post we’ll be looking at the Kount ecommerce fraud prevention tool.

What is Kount?

Kount is a Magento extension that provides Magento store owners with an easy-to-use fraud detection system, one that can be scaled to the specific needs of the individual merchant. By integrating Kount with your Magento web store, you can not only reduce operational costs (incurred due to employing costly and time-consuming manual order review) but can also mitigate losses that may be incurred due to fraud such as:

•  Lost revenue through rejection of good orders that look suspicious
• Chargebacks and fines
• Affiliate fraud

How does Kount work?

The Kount extension basically offers you a set of customizable rules to configure on your web store, based on which it decides whether to Approve/Decline or Review an order’s status.

When you have Kount installed, it evaluates every transaction on your store via a fraud screening process, and then generates a “score” which indicates the likelihood of that transaction being fraudulent. Based on this score, the transaction is then either approved or rejected.

To determine this score, Kount includes rules based on the order’s physical (ship to) address, geography, recent credit history, historical purchase information, IP address as well as many other factors. These rules are highly complex and are based on Kount’s own expertise in fraud detection practices.

As you can see from the screenshot below, this particular fraud detection rule set in Kount contains a list of rules based on the IP address, Region, Payment method, Email address, Shipping/Billing Addresses and many other attributes of the Order.

Using these rules, you can eliminate or further scrutinize orders coming in from particular location for example. So that if an order comes in from a country/region which is defined as high risk in your rule set, Kount will automatically mark that order as In Review or Declined (depending on what action you’ve defined in the rule).

Kount Authentication Statuses

Based on the rules you set, Kount will mark the order with one of the following order statuses after authentication.
1- Approve = ‘A’
2- Decline = ‘D’
3- Review = ‘R’
4- Escalate = “E”
5- Review_Timeout = ‘X’
6- Approved_Declined_Timeout = ‘Y’
7- Elevated = ‘C’

VIP Order Approvals/Decline and Review

Kount also gives you the flexibility to bypass the rule set for certain addresses, Payments, Device Ids and email addresses, so that if that order was supposed to be declined based on the rule set, it will now be marked as VIP Approve/Decline or Review (depending on the rule after authentication), if the selected addresses, emails, etc. is in Kount’s white list.

To add an email addresses to the white list in Kount, all you need to do is add the email address in the VIP email list and set its desired status by going to Kount AWS > Fraud Control > VIP Lists > Emails, as shown in the screenshot below.

Once you’ve done that, Kount will update the scanned order’s status (after VIP Review/Approval or Decline) in Magento, as shown in figure 3:

Verdict

Kount is not the only ecommerce fraud prevention tool available for fraud detection/prevention in Magento. There is a wide range of other ecommerce fraud prevention tools and extensions which you can use as well, some of which are easy to integrate with your web store, but are more complex to monitor and use.

Kount is relatively easier to use, plus it gives you greater control over the fraud detection mechanism itself, via Rules definition, VIP approvals and user defined fields for custom fields. It’s the tool I would recommend for the job.

Feel free to leave your comments or feedback below. If you need help with setting up fraud detection tools or any other type of extension in your Magento web store, please get in touch with us.