Lenders beefing up technology to cut fraud risk

Lately, there has been a lot of attention paid to the risk for credit card fraud and horror stories about what effects this kind of crime can have on consumers, but cardholders should know that their lenders are significantly increasing efforts to protect them from these problems.

In the last few years, consumer credit card fraud has been in the news a lot and for good reason, according to a report from MarketWatch. Incidents of this crime were rising steadily a few years ago and eventually peaked in 2009, but since then have been slowly falling. This is likely the result of increased diligence on the part of credit card lenders, payment processors and other institutions involved in the industry, who saw the rising tide of fraud and took steps to reduce the effect criminals were having on the companies and their customers.

Credit card fraud mitigation measures have matured significantly since 2009, as businesses involved in these transactions have taken numerous steps to stay ahead of tech-savvy crooks, the report said. One of the easiest ways they can detect this sort of crime is by carefully monitoring spending behavior of their consumers, so that when anything out of the ordinary happens, they can check in within minutes – usually by phone, email or even text message – with the cardholder to determine that the abnormal transaction was made by them. What constitutes abnormal spending can vary, from location of the purchase or the amount of money spent to the type of purchase. For instance, if someone fraudulently purchases something a cardholder wouldn't normally buy in a faraway location for more than the victim usually spends, that would trigger all three fraud detection categories.

Verification also becoming more refined

In addition, lenders have also been able to develop ways to detect "mismatched" information used when making a purchase, the report said. For instance, if an unrecognized mailing address or email account is listed for an online purchase, that might also cause a red flag to go up. In many cases, lenders are also now requiring more information from consumers – such as their ZIP code and other personal details – before approving transactions.

"Fraudsters are becoming increasingly sophisticated in their approach, so online merchants must be even more vigilant in their efforts to protect the integrity of the online shopping experience for cardholders," Johan Gerber, the group head of global network products for MasterCard Worldwide, told the news site.

Consumers who want to take more steps to protect their finances on their own should also take the time to order copies of their credit reports, and check these documents closely. Sometimes, unfair markings could be having an adverse effect on their credit score. Working with a credit repair company can help to clear up the problems these items may pose to borrowers.