Fraud and Risk in the Electronic Payment Space

Fraud and Risk in the Electronic Payment Space Michelle Marshall-Thompson VP, Fraud/Risk Officer FirstMerit Merchant Bankcard

General lack of understanding within the payment space • “Authorizations” are not a guarantee of payment • Settlement of funds to a deposit account does not ensure funds will not be retracted • Inappropriate data verification

General lack of understanding of payment risks • Chargeback Risks • Financial Risks: • Expense of payment acceptance • Loss exposure after payment acceptance • Sensitive Data Security Risks: • Human behaviors • Network risks

Opportunities for Fraud • Internal Fraud • External Fraud • Network Breach, Data Theft, Fraud

Internal Fraud • Employee Embezzlement: • Fraudulent returns • Credentials theft • Misuse of position • Most unsuspecting person

Internal Fraud • Compensating Controls: • Oversight • Password protection • Policies regarding information sharing • Random Google or background searches

External Fraud • Fraudulent use of card information • Lost/stolen card numbers • Alleged fraud • Merchant financial exposure

External Fraud • Compensating Controls: • Exposure of swiped, keyed & e-commerce transactions • Use of data verification: address, zip, CVV • Additional red flags • Work with banking partners

Network Security Risks • PCI non-compliance • Human behavior • Banking credential hacks • Wire fraud, sensitive data breach

Network Risks • Compensating Controls: • Utilize the expertise of third parties • Work within well established guidelines • Oversight of employee responsibilities

Where To Turn • If you believe your organization/entity could be vulnerable to risks reviewed today, contact me directly at 330-849-8937, for further discussion • Contact your banking institution to inquire about additional controls and risk mitigating options • Don’t expect to “go it alone” - work with your partners

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Fraud and Risk in the Electronic Payment Space