Phone-order fraud is expected to spike in the same manner as any other card-not-present fraud as a result of the U.S. migration to EMV chip-based cards at the point of sale.
Some in the payments industry consider call centers a dated sales channel because of potential gaps for fraud, since call center staff must routinely request or overhear sensitive data. Some technologies, such as voice biometrics, are seen as means to better protect data that gets passed over the phone.
San Francisco-based Forter is taking a different approach.
The security vendor is adapting its real-time authorizing service, originally designed for e-commerce, as a method to protect call-center orders, said Liron Damri, chief operating officer and co-founder of security vendor Forter.
Forter will use behavioral analytics to distinguish a legitimate customer from a fraudster, becoming one of the first companies to provide immediate transaction analysis for call-center receptionists, Damri said.
"The classic fraud is just someone who has card information from a breach and is pretending to be the owner of the card," Damri said. Forter will provide immediate alerts to call-center receptionists to raise a red flag if a transaction appears suspicious.
Forter is able to immediately analyze patterns between the order being taken over the phone with similar online sessions in which the same payment card was used, Damri said.
The process allows merchants to avoid difficult rules for call centers to follow, which often lead to lost sales, he added.
The merchant establishes a policy for what the receptionist would do if a transaction is denied, Damri said. "We don't want them telling the fraudster that we have caught them, but more along the lines of not being able to complete the transaction at this time," he added.
Forter does not have access to eavesdrop on the call at any point, but uses technology to interrupt the receptionist, Damri said.
Forter's ability to intervene on behalf of the merchant during the actual call represents a new phase in fraud protection, said Julie Conroy, research director and fraud expert with Boston-based Aite Group.
It may also help the customer experience, since merchants tend to "have their operators' hands tied in knots" with restrictions when taking a phone order, Conroy said.
"The call center hasn't been highly protected in the past, so from that sense it has been easy pickings [for criminals]," Conroy said.
Forter also accepts liability for chargebacks, but larger merchants tend to want to retain the decisioning capabilities for transactions, Conroy added.
Phone-order fraud tends to be less of an issue than other forms because companies have "the luxury of delivering physical goods, so they don't fill the order immediately and can have more time to assess a transaction," Conroy said.
But with Amazon Prime and similar services starting to popularize short-term deliveries, it is possible fraudsters will see an opportunity to quickly complete a bogus transaction.
Forter has just started offering the call-center protection, primarily targeting larger retailers. In addition to its headquarters in San Francisco, Forter operates a research and development center in Israel.
Last month, Forter released its findings on e-commerce fraud rates in each state in the U.S., providing a picture of fraud hot spots in the country while helping the company monitor illegal activities.