Chargebacks911: Biometrics-Based Security Benefits Consumers, But Not Yet CNP Merchants

With 100% of mobile devices to be equipped with biometrics by 2020, many expect a decline in fraud. Loss-prevention specialist Chargebacks911 sees great promise in the technology but notes several caveats may hinder its adoption and success.

(Tampa Bay, FL) June 4, 2018 – Biometric validation continues to make headlines in the payments industry: as of April, major U.S. credit card companies dropped signature-based authentication requirements in favor of newer technologies.⁽¹⁾ Researchers predict that by 2020, all new smartphones, wearables and tablets will be equipped with one or more biometric tools,⁽²⁾ and forecasts indicate global mobile biometric revenues will more than double from 2018 to 2022, soaring from $20.6 billion to $50.6 billion.⁽³⁾ Chargebacks911, a leading dispute mitigation and loss prevention firm, believes biometrics can be a powerful weapon in the war against fraud. However, co-founder and Chief Operating Officer (COO) Monica Eaton-Cardone cautions that privacy and security issues must first be resolved, and she advocates for biometrics data to be accepted in eCommerce chargeback disputes.

Biometrics encompass multiple forms of authentication based on physical and behavioral characteristics, such as fingerprint scans, facial recognition, voiceprint matching, iris and retinal scans, and “eyeball tracking”. A study conducted by Mastercard and the University of Oxford found that 93% of consumers prefer biometrics over passwords for payment validation, and 92% of banks want to adopt biometric technology.⁽⁴⁾ Mastercard also revealed that biometric authentication can reduce cart abandonment rates by up to 70% compared to other forms of verification, such as a one-time code sent via SMS.⁽⁴⁾ Many consider biometrics superior to passwords because they are not as vulnerable to phishing and require no memorization; yet legal experts warn that databases containing biometric data could be compromised—creating long-lasting and irreversible consequences.⁽¹⁾

“The payments industry is abuzz over the potential for biometrics to thwart fraudsters and drastically reduce fraud losses; yet we still have a long way to go before that potential is fully realized,” asserted Eaton-Cardone. “Though biometrics now come standard on new mobile devices, it could take years before merchants, payment processors and acquiring banks are able to update their systems to collect and process that data. Furthermore, some consumers may have privacy concerns and balk at having their image or fingerprints stored in a database, which could delay widespread adoption. And if biometrics databases are ever breached, the results could be catastrophic for consumers—so liability issues and security risks must be addressed before biometrics-based authentication rolls out industry-wide.”

Given that card-not-present (CNP) fraud is steadily rising while point-of-sale (POS) fraud has declined in recent years—with CNP fraud 81% more likely to occur than POS fraud⁽⁵⁾—Eaton-Cardone is disappointed that credit-card companies and banks continue to invest in POS biometric tools ahead of CNP ones. Visa and Mastercard both recently debuted new cards with built-in fingerprint scanners, which will further augment the security provided by EMV chips and tokenization.⁽¹⁾ But as yet, no major card company or bank has rolled out biometric tools specifically geared for CNP merchants, and there are no estimates as to the technology’s potential financial impact on today’s mounting CNP fraud losses.

“eCommerce merchants could benefit tremendously from biometrics technology. Not only does it have the potential to reduce both criminal fraud and friendly fraud, but it can also minimize false declines and ensure that valid orders are approved and processed in a timely manner,” said Eaton-Cardone. “However, these benefits cannot be realized unless banks and card networks are willing to work with merchants. Rather than focusing solely on protecting consumers, developing POS tools and preventing criminal fraud, card networks should also leverage biometrics to help CNP retailers fight chargeback fraud. If biometric data shows that a customer placed and received an order, the card network should accept it as proof that the transaction is legitimate and subsequently place the burden of proof on the customer rather than the merchant.”

While Eaton-Cardone remains optimistic about biometrics’ future possibilities, she counsels CNP merchants to proactively take steps now to guard against losses instead of waiting for biometric authentication to go mainstream. She advises retailers to:

• Use address and IP verification on all orders to flag suspicious transactions.
• Conduct compliance reviews to pinpoint and correct merchant errors.
• Undertake efforts to identify and address the true source of chargebacks.
• Engage in tactical representment to dispute likely cases of friendly fraud.

She also advises partnering with an experienced chargeback management specialist—one that has access to the most current fraud-fighting tools and in-house expertise to help merchants maximize return on investment.

Chargebacks911 is dedicated to educating and supporting eCommerce merchants with services designed to increase profits, reduce chargebacks and combat fraud. To that end, Monica Eaton-Cardone and her team will be participating in a number of upcoming industry events, including the Subscription Summit in Denver, Affiliate Summit East in New York and Money20/20 USA in Las Vegas. For details on Chargebacks911’s comprehensive risk management solutions, informative articles and other merchant resources, visit https://chargebacks911.com.

About Chargebacks911:

Chargebacks911, known as The Chargeback Company in Europe, safeguards over 2.4 billion online transactions every year, representing clients in 87 different countries. It is the first global company fully dedicated to mitigating chargeback risk and eliminating chargeback fraud, and the company has won the Customer Choice Award for Best Chargeback Management Solution at the CardNotPresent Awards for two years in succession. As industry-leading innovators, Chargebacks911 is credited with developing the most effective strategies for helping businesses maximize revenue and reduce loss in a variety of industries and sectors within the payments space.

Chargebacks911 provides comprehensive and highly scalable solutions for chargeback compliance, handling services and fraud strategy management. With unparalleled category experience and Intelligence Source Detection (ISD™) technology, Chargebacks911 identifies the true source of chargebacks, optimizes revenue recovery opportunities, mediates disputes, safeguards reputations, monitors transactions 24/7 and helps proactively prevent future fraud. To learn more about Chargebacks911, visit www.chargebacks911.com.

1. Uria, Daniel. “All 4 Major U.S. Credit Cards Ditch Signatures, With Eye on Biometrics”; United Press International; April 30, 2018.

1. Cakebread, Caroline. “Biometrics Like Face ID Are Coming to Your Smartphone Whether You Like It or Note”; Business Insider; September 18, 2017.

1. Acuity Market Intelligence. The Global Biometrics and Mobility Report: The Convergence of Commerce and Privacy — Market Analysis and Forecasts 2016 to 2022; August 2017.

1. Mastercard. “Biometric Identification Must Be Made Available for All Mastercard Users by April 2019”; press release issued January 23, 2018.

1. Javelin Strategy & Research. “Identity Fraud Hits All-Time High With 16.7 Million U.S. Victims in 2017, According to New Javelin Strategy & Research Study”; press release issued February 6, 2018.