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Study Reveals How CNP Merchants Can Slash Fraud Risk



James Packer

James Packer, Esq., SignatureLink COO & General Counsel

Everyone involved with payment acceptance knows eCommerce and mobile fraud is responsible for billions of dollars in losses every year. What isn’t as obvious is that small and mid-sized online retailers are not only aware of the need for fraud prevention, they’re actively trying to combat it. But eCommerce fraud is a rapidly growing problem in spite of their best efforts, and a study conducted by eCommerce stabilizer SignatureLink shows that instead of taking the shotgun approach to fighting fraud, 90% of retailers would be better served by focusing on some key actions that eliminate the costly problem of blatant fraud and CybershopliftingTM, also known as “friendly fraud.”James Packer

We undertook the SignatureLink SecureBuy™ 2012 CNP Fraud Study in an attempt to quantify what we knew about online retailers’ response to online payment fraud. During August and September 2012, 379 online and bricks-and-mortar merchants participated in the study. They answered questions about their antifraud efforts and the effects of eCommerce fraud on their businesses. The resulting data provided greater insight into what merchants are getting right and shined a spotlight on the areas in which they’re missing the mark.

While anecdotal data had led us to believe small and mid-sized merchants, in particular, weren’t attempting to prevent eCommerce or mobile fraud and actually viewed fraudulent chargebacks as a cost of doing business on the Internet, study respondents painted a very different picture. In fact, 65% of online merchants have already implemented active verification systems (i.e., Verified by Visa, MasterCard SecureCode) in an admirable effort to fight online payment fraud; a slight majority of study respondents — 52% — perform pre-fraud screening, usually in the form of IP address geolocation.

Unfortunately, current active verification processes are uncomfortable at best for many shoppers who are already wary of providing too much information online, especially during their first interaction with an eCommerce site, and, although active verification is an effective way to thwart fraudsters, shopping cart abandonment becomes an issue with legitimate customers. For the 65% of online retailers using active verification, that translates to lost revenues.

An even more convincing argument against current fraud screening procedures centers on human capital. Across the board, approximately 55% of retailers’ fraud budgets are spent on the personnel required to manually review suspected fraudulent transactions. The other 45% of the retailers’ fraud budgets are spent on deploying an average of eight fraud screening applications.  It is obvious that current fraud screening methods are not working as well as we may think.

At SignatureLink, we advocate true risk-based authentication. Risk-based authentication, which looks at many different variables in real-time to determine whether a shopper is a fraud risk and only invokes active authentication if the shopper is flagged based on those variables, has long been on the wish lists of just about everyone in the online payments industry, but it has never been anything more than a pipe dream — until now. With the upcoming release of SecureBuy™ 2.0, true risk-based authentication is finally available to all eCommerce merchants. The authentication process is completely automated, eliminating the expense and bottleneck of manual review and ultimately increasing the bottom line. By removing the human manual review factor from eCommerce and mobile payments the original intended business process automation and associated economy of scale is returned to the merchant.

As for first generation IP address geolocation, the unfortunate reality is that IP addresses are easily spoofed. If a criminal wants to get around geolocation screening measures, he or she will. Worse, in screening out everyone from a particular location, merchants inadvertently turn away paying customers. There are far more sophisticated second generation fraud screening measures available that screen for a variety of red flags to prevent fraudulent transactions before they start.

So assuming they’re getting authentication and screening right, where can eCommerce merchants get the biggest (and most effective) bang for their fraud-fighting buck? Thanks to the SignatureLink SecureBuy™ 2012 CNP Fraud Study, the answer is clear. Remember that 90% figure above? That’s a real data point. Only 10% of study respondents said they get the customer’s written or verbal consent to each transaction. The remaining 90% are leaving themselves wide open to fraudulent chargebacks, as evidenced by our finding that 52% of online retailers win the representment process less than 20% of the time (and just over 70% win less than 60% of the time).

Perhaps even more compelling: Only 12% of merchants win the representment process virtually every time — a figure so near the 10% of merchants who get written or verbal customer consent, the correlation is impossible to ignore. At SignatureLink, we advocate securing written customer consent with every transaction. It’s one reason why we’ve designed SecureBuy™ to provide the industry’s first eCommerce Certified Signed Sales Receipt.

Merchants who really want to stop being on the losing end of eCommerce fraud must make use of the available signature-capture technology and ensure every single customer sees, understands, and agrees to their terms and conditions (T&Cs). When that process is integrated into every transaction it stabilizes eCommerce for merchants, banks, and consumers.

In the end, the SignatureLink SecureBuy™ 2012 CNP Fraud Study was not so much about facts and figures as it was an opportunity to look at what’s not working for merchants and banks alike and to begin a conversation around the next steps for the industry. If you’d like to see the study for yourself, I invite you to visit for a free download.

About James Packer, Esq.
James Packer, Esq. is SignatureLink’s Chief Operating Officer and General Counsel. Formerly corporate legal counsel and director of operations for merchant advocate and payments best practices firm Merchant Lifeline, LLC, Mr. Packer is a seasoned leader in the areas of chargeback recovery and fraud risk analysis.

About SignatureLink, Inc.
Founded in 2002, SignatureLink, Inc. is the eCommerce stabilizer. The company’s SecureBuy™ is the world’s first true all-in-one fraud solution. Visit for more information.


Robinhood plans confidential IPO filing as soon as March – Bloomberg News



Robinhood plans confidential IPO filing as soon as March - Bloomberg News 1

(Reuters) – Online brokerage Robinhood, at the centre of this year’s retail trading frenzy, is planning to file confidentially for an initial public offering as soon as March, Bloomberg News reported late on Friday, citing sources.

The California-based brokerage has held talks in the past week with underwriters about moving forward with a filing within weeks, Bloomberg said.

Robinhood did not immediately respond to a request for comment.

Reuters reported last year that Robinhood has picked Goldman Sachs Group Inc to lead preparations for an initial public offering which could value it at more than $20 billion.

Robinhood was at the heart of a mania that gripped retail investors in late January following calls on Reddit thread WallStreetBets to trade certain stocks that were being heavily shorted by hedge funds.

The online brokerage tapped around $3.4 billion in funding after its finances were strained due to the massive trading in shares of companies such as GameStop Corp.

(Reporting by Ann Maria Shibu in Bengaluru; editing by Richard Pullin)

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Analysis: How idled car factories super-charged a push for U.S. chip subsidies



Analysis: How idled car factories super-charged a push for U.S. chip subsidies 2

By Stephen Nellis

(Reuters) – When President Joe Biden on Wednesday stood at a lectern holding a microchip and pledged to support $37 billion in federal subsidies for American semiconductor manufacturing, it marked a political breakthrough that happened much more quickly than industry insiders had expected.

For years, chip industry executives and U.S. government officials have been concerned about the slow drift of costly chip factories to Taiwan and Korea. While major American companies such as Qualcomm Inc and Nvidia Corp dominate their fields, they depend on factories abroad to build the chips they design.

As tensions with China heated up last year, U.S. lawmakers authorized manufacturing subsidies as part of an annual military spending bill due to concerns that depending on foreign factories for advanced chips posed national security risks. Yet funding for the subsidies was not guaranteed.

Then came the auto-chip crunch. Ford Motor Co said a lack of chips could slash a fifth of its first-quarter production and General Motors Co cut output across North America.

“It brings home very clearly the message that the semiconductor is really a critical component in a lot of the end products we take for granted,” said Mike Rosa, head of strategic and technical marketing for a group within semiconductor manufacturing toolmaker Applied Materials Inc that sells tools to automotive chip factories.

Within weeks, automakers joined chip companies calling for chip factory subsidies, and U.S. Senate Majority Leader Chuck Schumer and President Biden both pledged to fight for funding.

Industry backers now aim to be part of a package of legislation to counter China that Schumer hopes to bring to the Senate floor this spring. Still, all agree it will do little to solve the immediate auto-chip problem.

Headlines about idled car plants resonated with the public that had shrugged off abstract warnings in the past, said Jim Lewis, a senior fellow at the Center for Strategic and International Studies. Lawmakers, already worried that a promised infrastructure bill will not materialize this year, decided to push for quick solution.

“Nobody wants to be seen as soft on China. No one wants to tell the Ford workers in their district, ‘Sorry, can’t help,'” Lewis said. “It was one of those moments where everything aligned.”

The package includes matching funds for state and local chip-plant subsidies, a provision likely to heat up competition among states including Texas and Arizona to host big new chip plants that can cost as much as $20 billion.

The subsidies could benefit a factory in Arizona proposed by Taiwan Semiconductor Manufacturing Co and one in Texas eyed by Samsung Electronics Co Ltd, even though those factories would be geared toward high-end chips for smartphones and laptops, rather than simpler auto chips. And those factories would not come on line until 2023 or 2024, according to plans disclosed by the companies, the world’s two largest chip manufacturers.

In the longer term, a raft of U.S. companies are also poised to benefit. Any chipmakers that build factories will source many tools from American companies such as Applied, Lam Research Corp and KLA Corp.

Intel Corp, Micron Technology Inc and GlobalFoundries – which already have U.S. factory networks – will also likely benefit.

Smaller, specialty chip factories also could benefit.

“The recent chip shortage in the automotive industry has highlighted the need to strengthen the microelectronics supply chain in the U.S.,” said Thomas Sonderman, chief executive of SkyWater Technology, a Minnesota-based chipmaker that makes automotive and defense chips. “We believe that SkyWater is uniquely positioned due to our differentiated business model and status as a U.S.- owned and U.S.- operated pure play semiconductor contract manufacturer.”

Even with subsidies, the U.S. companies still must compete with low-cost Asian vendors over the long run, and the immediate auto chip troubles will probably persist.

Surya Iyer, a vice president at Minnesota-based Polar Semiconductor, which makes chips for automakers, said his factory is booked beyond capacity and has started to speed some orders up while slowing others down, to meet automakers’ needs as best it can.

“We are expecting this level of demand to continue at least for the next 12 months, maybe even longer,” he said.

(This story has been refiled to add attribution to quote in paragraph 9, add dropped words in paragraphs 10 and 17)

(Reporting by Stephen Nellis and Hyunjoo Jin in San Francisco and Alexandra Alper in Washington. Editing by Jonathan Weber and David Gregorio)

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Atlantia disappointed with CDP bid for unit, continues talks



Atlantia disappointed with CDP bid for unit, continues talks 3

By Francesca Landini and Stephen Jewkes

MILAN (Reuters) – Italy’s Atlantia said on Friday an offer by a consortium of investors led by state lender CDP for its 88% stake in Autostrade per l’Italia fell short of the mark and asked its top managers to see if the bid could be sweetened.

“The offer falls below expectations,” the Italian infrastructure group said in a statement, adding it had mandated the chief executive and the chairman to assess “the potential for the necessary substantial improvements” to the bid.

Italian state lender CDP, together with co-investors Macquarie and Blackstone, has presented a proposal valuing all of Autostrade per l’Italia at 9.1 billion euros ($11 billion).

The consortium also requested Atlantia guarantee up to 700 million euros in potential damage claims and another roughly 800 million euros for a pending legal case, making the bid less attractive than previously expected.

One source said the consortium estimated overall pending legal claims against Autostrade at 3 billion to 4 billion euros, adding the 700 million euro cap did not mean the amount would be detracted from the offer price from the start.

Earlier on Friday Atlantia’s minority investors TCI and Spinecap had called on Atlantia’s board to reject the offer, saying it undervalued the asset.

“No deal is better than a bad deal, especially a bad deal and a wrong price,” TCI Advisory Services partner Jonathan Amouyal said in a emailed comment to Reuters.

TCI, which holds an indirect stake of around 10% in Atlantia, repeated that the value for 100% of Autostrade should be no less than 12.5 billion euros.

The board will hold a further meeting in order to take a final decision on the offer in due time, Atlantia said.

The negotiations between Atlantia and the CDP-led consortium are part of an effort to end a political dispute over Autostrade’s motorway concession triggered by the collapse of a motorway bridge run by the unit.

(GRAPHIC – Atlantia share performance:

The bid expires on March 16, but the deadline could be extended in case Atlantia calls an extraordinary shareholders meeting (EGM) on the issue, according to one source with knowledge of the matter.

Shares in the group ended down 0,7%, after recovering some losses, as investors waited for the decision of the board.

Atlantia, which is controlled by the Benetton family, owns 88% of Autostrade, with Germany’s Allianz and funds DIF, EDF Invest and China’s Silk Road Fund holding the rest.

The group also kept open an alternative plan to demerge and sell its stake in Autostrade per l’Italia unit and called an EGM on March 29 to extend to end-July a deadline for offers for the demerged stake.

(Additional reporting by Stefano Bernabei, editing by Louise Heavens and Steve Orlofsky)

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