Prediction suite fights Net fraud

An internet fraud screening company claims that its newly-launched European operation could protect the biggest victim of credit card fraud - the retailer.

An internet fraud screening company claims that its newly-launched European operation could protect the biggest victim of credit card fraud - the retailer.

eHNC, a subsidiary of financial services software supplier HNC, will rent out its eFalcon fraud management software through an application hosting service.

eFalcon uses neural network software to identify suspicious credit card transactions. The software will add to current checks, which merely ascertain if the credit card exists and if it has enough credit for the purchase.

Dermot McCormack, chief technology officer at US eretailer flooz.com, which has used eFalcon for the past two months, said the software helped eradicate mischief. "There is probably a 30 per cent to 40 per cent difference in our detection rate," he said. "I'd advise retailers trading online to at least think about fraud."

Credit card fraudsters are homing in on the Net. According to researcher Datamonitor, more than 48 per cent of all credit card fraud occurs online. Yet only two per cent of Visa transactions, for example, take place on the internet.

"It's easy to see how fraud could wipe out the physical world profits," said Julie Cunningham, credit card analyst at Datamonitor's financial practice. "Using software to cut this is something retailers should be looking at."

Retailers usually bear the cost of fraudulent transactions that are conducted without the card holder present. Datamonitor estimates that each disputed transaction costs a retailer £16 to process, compared with an average annual profit of £60 on each card.

"There is a clear need for solutions that combat online fraud," said Doug Burke, president of eHNC.