top of page


The purpose of breaking the strategy design into phases is to make you look at your business process in terms of goals; for each phase there is a definitive goal of what you want to achieve.



The purpose of breaking the strategy design into phases is to make you look at your business process in terms of goals; for each phase there is a definitive goal of what you want to achieve.

By looking at the business process in this fashion you can look at new fraud techniques and more quickly envision where they fit into your strategy.

Another approach to designing a strategy is looking at the level of risk a company is exposed to. The higher the risk, the more you must rely on fraud-prevention techniques and the more extensive these checks will have to be.



This session covers what constitutes a fraud solution and categorizes the many types of third party fraud tools. The course outlines the common terminology of fraud solutions and describes the capabilities needed to implement a fraud solution.


With so many fraud vendors and solutions to choose from in the market, how do you know what will work best for your company? How do you compare vendors and solutions? This session provides a method to categorize fraud solutions and services into 8 groups so you can better perform apples-to-apples comparisons. The session builds on the “Moving from Tools to Solutions” session by providing a description of what each group focuses on, where they are best applied, along with a list of commonly used vendors in each category.


A core curriculum course providing an introduction to 30 plus fraud prevention techniques; what they are, high level discussion on how to employ them and big picture considerations for using them.

In this section I will discuss some basics of strategy design to get you started. Saying that, lets talk about the basics of strategy design. There are five major phases of a strategy. Each phase has distinct goals and techniques that can be used to accomplish those goals. These five phases are:

  • Pre-screen

  • Payment

  • Post-screen

  • Review

  • Accounting


  1. Hot Lists

  2. Positive LIsts

  3. Velocity of Change

  4. Velocity of Use

  5. Rules

  6. Consumer Authentication

  7. Verified by Visa

  8. MasterCard SecureCode


  1. Authorization

  2. Address Verification Service

  3. Advanced Address Verification

  4. ACH (Electronic Checking)

  5. Debit

  6. Card Security Check


  1. Geolocation

  2. Fraud Scoring

  3. Modeling

  4. Reverse Address & Phone Lookups

  5. Crdit Checks


  1. Call Back Consumer

  2. Call Bank

  3. Cross Check of Buying History

  4. Query Order Activity


  1. Settlements

  2. Credits

  3. Charge-back Processing

  4. Sharing & Updating Information with Peers and Partners

  5. Educations

  6. Tuning of Strategy

The pre-screen phase is used to review an order’s information to determine acceptance criteria. This phase is typically automated, and it conducts rules and checks to attempt to completely rule out orders you will not do business with, regardless of any other checks. In the pre-screen phase you are trying to weed out orders with the intent of saving time and money. Why process authorizations or other fraud-prevention checks on an order if you know you won’t take the order regardless of the outcome? Examples of orders being cut out here are those that are international when the company only does business in the USA, or the rejecting of an order because the order contains data on your internal hot list.

In the payment phase you are conducting the processes and checks required to accept an order. This includes getting an authorization, address verification information and card security check data.

The post-screen phase is where you perform your advanced reviews on orders that have passed the pre-screen and payment phases. This includes using business logic as well as advanced fraud-prevention techniques. Typically the first thing you want to check in this phase is the positive list to see if you can automatically pass all other tests.

The review phase includes all of the post-screening checks you do to attempt to catch fraud or to convert orders. This phase is a manual phase, and can be as simple as doing spot checks on orders to having review queues and manual sorting.

The accounting phase starts once an order has been fully accepted and lasts until 12 months after the sale. This includes processing credits, settlements, reauthorizations, charge-backs and tuning of the overall fraud-prevention strategy.

Typically the pre-screen, payment and post-screen phases are automated and occur in real-time. The review and accounting phases will make use of automation tools but are mainly manual processes.

Designing a Strategy Based on Risk Exposure

One approach to designing a strategy is looking at the level of risk your company is exposed to. The higher your risk, the more you will rely on fraud-prevention techniques and the more extensive the checks will have to be.

For some merchants the level of risk they are exposed to is so small that the standard address verification and card security schemes offered by the credit card associations will be more than enough. For example the education, utilities and government sectors can reach out and touch their consumers, de-frauding them is much more unlikely. Not that it doesn’t happen — it’s just not that high of a concern.

The following chart provides a break out of fraud-prevention techniques by the level of risk a merchant is exposed to. View the three levels of risk and determine which category you fall into. In looking at the characteristics, they are not meant to be all-inclusive — you may only meet one or two of the criteria listed. These characteristics are meant to form a guide to determine the level of risk you may be exposed to.


Low Risk

  • Looking for lowest-cost solutions

  • Low volume

  • High margin

  • Clothing, utilities, tuition, insurance

  • Fraud rate less than .25% or total loss of dollars less than $5,000

Medium Risk

  • Medium to high volume

  • Low to medium margin

  • High fencibility electronics, toys, games, music, personal services, books, clothing, travel, international business

  • Fraud rate greater than .75% or total losses exceeds $50,000 per year

High Risk

  • Medium to high volume

  • Low to medium margin

  • Very high fencibility electronic downloads, high-end electronics, financial vehicles, gift cards, adult, gaming, rechargeable cell phones, travel, international business, credit line or card issuance

  • Fraud rate greater than 1% or total fraud losses exceeds $100,000 per year

bottom of page