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03:55 AM

Pushback on Chargebacks

User data inside browser could hold the key to reducing online fraud and losses

1:55 PM -- I've been interested in passive and active sniffing of browsers for a long time. One thing I really don't think has been touched often enough is the bridge between business economics and the types of users who visit Websites. More than just their height, age, or IP address, what else is available to us?

Companies like Cybersource do all sorts of interesting charge-back ratio prevention analysis. For instance, they look at the sex of the user. Why? Because a woman signing up for a porn site is a very high predictor of fraud and, therefore, chargebacks.

For anyone not familiar with how chargebacks work, merchants have to wait up to six months before the various credit card companies stop allowing their consumers to ask for their money back. Each chargeback not only costs the merchant money but it also can add up in fines. If your chargeback ratio is too high, you can be fined thousands of dollars a day until your chargeback ratios return to a reasonable level.

That's a big hit for merchants that will either cause companies to go out of business, pass the costs back to the consumer, or eat the charges. Any way you slice it, it's bad business.

What if there were a way for the merchant to look into the consumer's computer and find out information about it. Perhaps knowing more about the user would raise flags.

One simple example of this is the browser user-agent header. Are you more likely to trust someone who has Internet Explorer or Firefox to perform a transaction? Well, Firefox users tend to be more Web-savvy. And such users tend to be more on the cutting edge of technology, so they are more likely to abuse the system, commit fraud, or at the very least know how to charge back a credit card fee.

But can something as simple as a user agent tell merchants who they should be doing business with online?

If that were the case, there are dozens of things merchants could look at. Some spyware leaves signatures, and browsers often tell you that they've got firewalls installed. There are hundreds of variables and variants that could point to a higher or lower level of suspicion based on the signatures that every browser sends.

Of course, this is all theory. I don't have any data to back it up. Anyone want to let me have access to all their financial transactions and traffic to do chargeback analytics? It's a hard thing to sell, but it could mean big savings on chargeback for online businesses.

— RSnake is a red-blooded lumberjack whose rants can also be found at Ha.ckers and F*the.net. Special to Dark Reading


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