Long before online transactions became widely used methods for payments, credit card fraud was already a cash cow for scammers and con men. These fraudsters subsisted, often lucratively, off of impersonating or stealing the identities of others and using their credit card information to perform fraudulent purchases and other transactions. This type of “analog fraud” still exists today, but it’s been surpassed in popularity by its online equivalent as many swindlers have shifted to the digital realm, where card-not-present transactions make it even easier for hackers and other cybercriminals to acquire cardholder data. As payments have evolved, so has the cat-and-mouse game between security defenses and those attempting to penetrate them.
With card-not-present transactions more prevalent than ever, it is absolutely critical for merchants and other organizations accepting cardless transactions to protect their customers’ sensitive payment information and prevent credit card fraud. TokenEx has worked for 10 years in the payment space, providing us with a deep understanding of the concerns that come with safeguarding payment card information from fraud and theft. To assist you in adopting and implementing a data-centric security strategy, here are five methods to prevent credit card fraud and data theft.
Data Minimization for Protection Against Credit Card Fraud
Put simply, the easiest way to prevent credit card fraud and theft is to not accept or store payment card information in the first place. Obviously, when taken literally, this task is much more difficult than it sounds, so it’s not a realistic course of action for many organizations that rely on digital payments to fuel their operations. However, the thought behind this sentiment suggests a more feasible, pragmatic overall philosophy of data protection: Don’t process or store what you don’t need. Accept only information that is required to execute transactions and avoid storing any superfluous data that does not add value that’s at least equal to the risk of retaining it. That means keeping sensitive data ingestion and storage to an absolute minimum, thereby reducing the amount of payment card information in your cardholder data environment and making it easier to track and secure what you do possess.
Network Segmentation for Credit Card Fraud Protection
Network segmentation is another fraud-prevention measure that at first might sound like a bit of an oversimplification. Identifying all of the credit card information in your organization’s internal systems and ensuring that it is sequestered to one part of your network can be difficult and expensive due to the cost of monitoring and maintaining secure systems and other hardware. But despite its costliness, this method is also extremely effective. Like data minimization, network segmentation protects against credit card fraud and theft by removing data from the equation and reducing risk as much as possible. This mitigates the exposure of your sensitive data by allowing it to be stored and accessed in only one place, effectively minimizing your attack surface.
Access Control for Credit Card Fraud Prevention
Once you’ve implemented the strategies of data minimization and network segmentation for credit card fraud prevention, the natural next step is to administer an effective access-control system. In order for the two previously mentioned strategies to be viable, you must control who has access to the sensitive data in question and determine what their appropriate level of access should be. For example, a desk agent or call center operator should not have permission or the ability to view your entire database of credit card information. This would generate unnecessary risk and increase the potential damage from an intrusion by allowing anyone with that individual’s login credentials to also access that database, adding insult to the injury of a data breach.
How to Prevent Credit Card Fraud With Obfuscation
Obfuscation is a method of securing sensitive data by altering or masking the data so it is unreadable without the aid of protected keys or other additional information. Popular data protection technologies that offer obfuscation are tokenization and encryption. Encryption works by using a protected key to encrypt the data, applying a code to it that changes the original information into what appears to be random characters. Tokenization exchanges the sensitive data for a randomly generated placeholder called a token and stores the original information in a secure cloud offsite. Encryption can be reversed by applying the key to decrypt the data, whereas tokenization can’t be reversed by an outside party, per se, only exchanged for the original data by a user with the proper identification and credentials.
In effect, breached systems that contain encrypted or tokenized data prevent credit card fraud and stop hackers from stealing sensitive data by rendering the data unreadable and therefore worthless, providing an additional layer of protection in the event of a breach. Again, cybercriminals cannot commit credit card fraud if they can’t access the data required in order to do it.
Credit Card Fraud Prevention Providers
Finally, once you’ve rolled out a layered security system, you can complete a comprehensive strategy for credit card fraud prevention by integrating fraud-prevention services or working with a fraud-prevention provider. TokenEx offers this functionality through our partnership with Kount, a prominent provider of digital fraud prevention and protection. Kount’s Software as a Service (SaaS) platform is specifically designed for companies operating in card-not-present environments, which can help simplify fraud detection and minimize disruption to your existing business processes.
Combining an artificial intelligence engine with supervised machine learning, Kount adds human reasoning to assist with analyzing transactions in your real-time payment stream, supplementing the AI logic with common sense and sound judgment. When evaluating a potentially fraudulent transaction, Kount compiles and analyzes the information it receives to provide a fraud score, a status, and about 60 data points that the business systems can use to decide the level of acceptable risk.
Learn how TokenEx partners with Kount to provide layered security for risk minimization.
Protect Yourself: Tokenization and Credit Card Fraud Prevention
With TokenEx as the integrator between your business systems and payment service providers, you can use fraud-prevention and -detection services without needing to receive, store, or transmit unsecure PANs or other sensitive payment data. This creates a layered security solution that virtually eliminates the risk of data theft in the event of breach and helps flag fraudulent actions if data does somehow become compromised. By leveraging data minimization, network segmentation, access control, tokenization, and a fraud-prevention provider, you can help better protect your sensitive data from credit card fraud.