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There is no single technology that can eliminate fraud, but many different tools have incremental value and when combined they can serve as a large detector of electronic fraud.  We came across many different tools and techniques that are currently being used in industries worldwide.  Address Verification Systems validate the billing address information provided by the consumer against the billing address information that the issuer has on record for the account.  This was the first security mechanism supported by credit-card issuers.  Another technique is the Card Verification Value, which is to ensure that the person submitting a transaction is in possession of the actual card.  Other tools include negative and positive databases.  A negative database is a defense method against repeat offenders, while a positive database is used to identify orders from repeat customers who are trusted.  Pattern detectors are tools designed to identify suspicious orders by analyzing the linkage and timing of a series of orders. 

One of the major current tools used is “payer authentication.”  Basically it tells you if the person on the other side of the wire is the legitimate cardholder.  Below is a diagram of how the payer authentication process works.



Its key benefit is that it can easily be implemented via single internet connection or single software component and it works with any payment system. 

Another very important risk management solutions tool for managers is Decision Management Software (DMS).  It allows managers to customize their fraud rules based on a specific product or environmental variable.  DMS quickly routes transactions for processing or customer service and provides the manager with the ability to adapt quickly to emerging fraud trends.  Key features of DMS include an extensible management platform, an easy-to-use graphical interface that can create and edit business rules on demand, customizable fraud plug-ins with a fraud screen, and integration with CyberSource and other payment processing systems.  Two major benefits of DMS are that it can react to new conditions without technical programming assistance and the manager can leverage greater control in designing and customizing fraud tools.  Below is a diagram of a risk management solution.


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