ReD launches Fraud Alert, bringing together issuers and merchants to reduce chargebacks

This article is brought to you by Retail Technology Review: ReD launches Fraud Alert, bringing together issuers and merchants to reduce chargebacks.

Retail Decisions (ReD), the payment fraud prevention and payment processing solutions provider, has announced the ReD Fraud Alert service, which enables issuers and merchants to easily exchange vital information in the fight against fraud.  As the most significant modern advance in fraud detection and prevention in recent years, ReD Fraud Alert has been proven to drastically reduce merchant chargebacks by 43% as well as the risk of consumers falling victim to fraud.

This pioneering enhancement to ReD's leading e-commerce fraud prevention service, ReD Shield, increases the accuracy of identifying fraudulent transactions.  Using information normally exclusive to the issuer, ReD creates a channel to enable its merchants to use a customer's full account profile to decide whether to accept or reject a transaction for items with a high ticket price.

Erika Gallo, Director, Global Risk Management for ReD, commented; "ReD Fraud Alert is a significant development enabling merchants and issuers to share information about suspicious fraudulent activity. The new service ensures that crucial transactional information can be disseminated quickly and effectively, protecting issuers and their customers, as well as merchants who have suffered liability for chargebacks, the loss of goods and association fines."

In recent trials, ReD has teamed with a large customer and global card Issuer to automate an effective way to reduce chargebacks by leveraging existing data and resources.  The trial delivered a 43% reduction (by percentage of value comparing January 2011 to April 2011) in chargebacks. The step-change reduction in chargebacks from 2.14% to 0.16% over this period meant that throughput of transactions on high suspicious transactions increased dramatically for one leading card issuer. 

The new service works by ReD sending a daily automated file containing details of high risk purchases to the issuer, if any suspicious activity appears on the customer's account the issuer calls the cardholder to verify the transaction. Information is then automatically sent back to ReD to authenticate the purchase. Risk models receive transactional confirmed fraud input within two days of authorization, faster than that of chargeback data which averages over thirty-eight days, increasing fraud detection rates faster through adopting models.    

Unlike the Address Verification Service (AVS) check that a merchant is typically limited to when verifying a transaction with the issuer, the merchant can now utilize the issuer's more comprehensive verification process, which improves the accuracy of detecting fraud. ReD Shield Fraud Alert compliments the existing ReD Shield service which increases its clients' revenue while minimizing losses from fraud thanks to sophisticated technology and a multi-dimensional approach to fraud detection and protection.