Pat- Thank you for your post. We at Quova enjoyed reading it and were glad to see that you appreciated the spirit behind our Valentine’s Day package. While the gift was clearly the attention-grabber, we did have a serious intent—to demonstrate the very real threat of card not present fraud, a critical security issue for online retailers. After all, online fraudsters worldwide weren’t joking around when they unlawfully carried off $3.1 billion in goods from e-commerce sites in 2006.

But there was another clue in our mailer as well. Pinpointing the physical origination point of an order on the Internet and comparing it to the bill-to and ship-to address is one of the most effective tools in combating online fraud.

Many online retailers already use some type of fraud risk scoring method. They may look at whether the buyer is a new or repeat customer, the nature of the purchase, especially a very expensive one, the type of shipping request, credit card security codes and more. But one item frequently overlooked is reviewing a customer’s location when they place an order online. By adding just this one step of comparing the customer’s billing address to his IP address location to the transaction, one Quova e-commerce customer was able to detect an additional 70 percent of his online fraud.

Think about it—nearly every business decision is affected by geography: language, currency, shipping, taxes, licenses, government regulations and more. When a customer walks into a brick-and-mortar store you can tell a number of things about them right away: age, gender, what they’re shopping for, whether they’re return customers. But when a customer visits your retail website, you know exactly none of these things…where they are, what they want, what brought them in, or how likely they are to be crooks. It’s an anonymous process. Knowing the geographic location of your web visitor can provide the same sort of data for an online transaction. So the fact that Tom isn’t actually based in your office was an indicator that something may have been amiss with the package.

Quova does this with a technology called IP Geolocation, which can tell you where your online customers are and how they connect to the Internet as soon as they visit your site (through their IP address). There’s no need to ask for further information or store cookies in their browsers. The service is offered on a subscription model and is easily deployed with an API to your web application.

So while we see we sparked some humorous discussion around your office last Thursday, we also hope that we spark some more meaningful discussion among your readers about the best practices in geolocation technology, and the role it can play as part of a comprehensive online fraud prevention strategy for retailers.

Kerry Langstaff is vice president of marketing for Quova, Inc.

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Tags: e-commerce, kerry langstaff, online fraud, quova

This entry was posted on Wednesday, February 20th, 2008 at 6:28 pm and is filed under Electronic Retailer, Government Affairs, Marketer, Online, Payment Processing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.