What is carding and how can merchants mitigate risk?

Ecommerce merchants have been hit by credit card carding attacks by fraudsters for years. There’s tons of cardholder data on the dark web and even DIY instructions on how to commit fraud. With EMV implemented in retail, and the fast growth of ecommerce due to Coronavirus, carding is a serious risk for merchants for both attempted and successful transactions.

What is carding?

Carding, also known as credit card stuffing or card verification, is a web security threat where unauthorized people (carders or attackers) use multiple software tools, primarily bots, to attempt to verify if a debit or credit card is good. A typical bot attack will incur thousands of attempted authorizations. Bots do not typically seek a particular site, just opportunities to exploit a weakness.

What are the costly repercussions of carding attacks?

The merchant is dealt with several financial blows:

  • Attempted transactions will incur a payment gateway fee.
  • Attempted transactions may incur a merchant account authorization fee if the gateway didn’t kill before getting to the acquirer. This can happen if the gateway supports a rules based decision making.
  • Completed transaction fraud whereby the product was shipped to the fraudster because the card was approved.
  • Chargeback fees can be initiated by the issuer or the cardholder. If the merchant is not using 3-D Secure, they will surely be out of luck.

How can merchants mitigate risk of bot attacks?

A key first line of defense is preventing the bot initiating an exchange with payment gateway. For example, reCAPTCHA is a free developer tool from Google to protect your web site from abuse. reCAPTCHA v3 returns a score for each request without user friction, which means if it passes, the user can check out. Have you ever had to go through multiple screen challenges to identify the sidewalks or traffic lights? reCAPTCHA v3 is different from older versions. The score is based on interactions with your site and enables you to take an appropriate action for your site automatically. For more information click here for Google reCAPTCHA.

Note, PCI DSS V 3.2.1 Requirement 6: Develop and maintain secure systems and applications. this section includes web sites. Visa cites using Velocity tools specifically in their ecommerce guidance for merchants. For example, a fraud mitigation velocity tool might automatically manage attempted transactions based upon number of attempts from same IP address or other duplicate data within a specific timeframe. Note, fraudsters have gotten smarter and bot attacks are not as simplistic to detect as just a few years ago. For this reason, the use of AI and other tools is growing, especially for larger merchants.

Call Christine Speedy, for simple solutions to card not present payment transaction problems, 954-942-0483, 9-5 ET. Christine is Founder of 3D Merchant Services, PCI Council Qualfied Integrator Reseller (QIR), and is a credit card processing expert with specialized expertise in card not present and B2B payment processing technology. Less than 1% of all merchant services sales representatives are QIR certified. Christine is an authorized independent sales agent for a variety of merchant services and payment technology solutions.

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