Fraud Prevention: An Overview

January 30, 2008

Fraudulent business transactions are something that none of us ever enjoy dealing with. It can hurt business, destroy profits, degenerate relationships, and ruin reputations. Fortunately, there are ways to reduce the risk of fraud and keep your business on the cutting edge of legitimacy. The following steps are just some of the ways you can protect your business from potential risk.

Identification

There are essentially two different types of fraud in the world of e-commerce: transaction fraud, and website operation fraud. Transaction fraud is possibly the most detrimental to your business; this happens when stolen credit cards and illegitimate bank accounts are used to make purchases. These fraudulent transactions tend to result in high chargeback rates, which can seriously hinder, or cripple, your profit margin. Perhaps the most frustrating part of transaction fraud is that it is almost entirely outside the webmaster’s control. You rely on the customer to be honest and make purchases legitimately. You must also rely on the banking and transaction services to monitor and filter suspicious activity.

Website operations fraud is largely in control of the webmaster. This type of fraud is related directly to internal business practices and delivering what is promised on the website. Prevention of fraudulent website operations will be discussed later in this article.

Finding the source of transaction fraud can be tricky, but there are some good places to start looking. Affiliates typically have the most to gain from sending fraudulent transactions through your program, because they still get to keep their cut, while you get stuck with chargeback fees, refunds and lost revenue. Not to mention, if refund and chargeback ratios become too high, your business can be stripped of its ability to process transactions.

Preventing Transaction Fraud

While completely eliminating all risk is next to impossible, there are several steps that can be taken to minimize exposure to transaction fraud:

Know Your Business Partners

Pre-screen affiliates. Many webmasters will create an affiliate sign-up process that is quick and easy. This is great for attracting new affiliates, but it can also open up doors to potential fraud. If the sign-up process is that easy, fraudulent affiliates have an easy avenue with which to commit fraud; however, any serious affiliate should be willing to take a little extra time to get in with a solid program that they know will make them the most money.

In this regard, using a two-step authentication process works very well. The first step is to ask for references – if you can get in touch with other websites the affiliate has promoted, you will get an inside look at how well this affiliate will perform for you. Any transgressions will be out in the open, and an affiliate’s past actions are the best indicator of how they will act in the future.

The second step is to validate the affiliate’s information. Doing a “Whois” lookup will reveal a lot of information about the affiliate. You can check to see the date the domain was registered, or trace the IP address of the affiliate’s login to see if it matches the correct postal address or bank wire receiving location.

In addition, countries with a low gross domestic product (GDP) have been historically at a higher risk of committing fraud than more industrialized nations.

Monitor the Transaction Flow
Watching the statistics for refunds and chargebacks for an affiliate is a good indicator of whether or not fraud is being committed. Statistics should be tracked at weekly, monthly, quarterly, bi-yearly and yearly intervals.

However, while this data is good to keep track of, if it is your only metric of determining fraud, it may be too late by the time the fraud is discovered. Historically, six percent of chargebacks occur within the first two weeks of a transaction being processed; 25 percent after a month; 66 percent after two months; and 85-90 percent after three months. Chargebacks in general can take anywhere from a few days to several months to come through on a transaction, so extra preliminary caution must be taken to prevent this.

Remove Fraudulent Affiliates From Your Program.
Once a fraudulent affiliate has been identified, it is crucial that they be suspended with no redirection, so all traffic going to them through your program is stopped. You will also want to cancel any recurring transactions sent from that affiliate; you may even consider refunding the customers’ subscriptions, for the sake of customer retention.

Preventing Website Operations Fraud

One of the leading causes of chargebacks for online businesses is customers feeling unsatisfied with the content of a website, whatever the reason may be. Typically, the best way to prevent this from happening is to make sure the customer experience on your Web site as good as it can be. The following items must be taken into account and provided for:

Accessibility and Support
Is the content on your site accessible and available? Do all the links work, and when videos and images are placed, do they show up properly to the user? Can the website accommodate different browsers and configurations? If users run into problems on your site, they will need a place to voice their concerns and receive support – this section of your website should be clearly defined and available.

Advertising
When working with affiliates, you place the responsibility of advertising in their hands. It is up to them to advertise your site correctly and ensure that nothing is being offered that can’t be delivered; misleading advertising can leave a sour taste in the mouths of users. A good general practice is to have a clearly visible Contact page, where users can get in touch with you should they have any questions about your site or what it is they are purchasing. This will enhance your relationships with customers and is likely to improve retention.

Cancellation Process
It is worth examining your account cancellation procedure to ensure it is fair and easy to do. Are the links easy to get to, and do they point to the right place? Potential customers are often hesitant to sign up for recurring billing subscriptions because they have been burned in the past by programs looking only to make cash quickly. Retaining members, and thus reducing chargebacks, is best accomplished not by discouraging cancellations, but by ensuring that the customer will have the experience they desire on your Web site.

Understanding and monitoring fraud is key to the success of any online business. Not only will it keep your reputation high, it will increase your profit margin by minimizing chargeback fees and fraudulent transactions.

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Mark Greenspan is the Vice President of Policy Review for EC Suite; a leading provider of complete e-commerce solutions, affiliate management, wholesale bandwidth, and content protection. Learn more about fraud prevention measures at ecsuite.com.

Timothy Sears, Fraud Manager for EC Suite, also contributed to this article.

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Turnkey Solutions: What You Should Know

January 8, 2008

The phrase “turnkey solution” is thrown around a lot in the e-commerce arena, hailed as a cure-all solution to anything and everything regarding e-commerce – but what exactly is it, and what’s so great about it? A turnkey solution is a one-stop shop that takes care of several needs at once – including but not limited to shopping cart functionality, transaction processing, and Web site hosting – with a single provider. In the world of e-commerce, turnkey solutions are the most effective tool on the market for maximizing the efficiency of your online business.

Turnkey solutions allow benefits that become highly evident within a very short period of time. With multiple services handled by the same provider, the finger pointing between vendors is all but eliminated; without this system in place, whenever an issue arises, one vendor will often look to another vendor as the source of the problem, regardless of where the actual problem lies. This typically results in the business owner having to make multiple phone calls to various companies trying to get an issue resolved, which can be a very lengthy process. With a turnkey solution, everything is handled all at once, so should an issue arise, only one contact needs to be made for a resolution.

With a full e-commerce turnkey solution, all the client needs is a product – the provider will get the product information online, make it available to purchase online, and deliver the end product to the end user. The online market makes this easy, as opposed to the tangible market where advertising and physical storage space must be purchased separately, amidst other companies competing for that same shelf space. Convenience is king, and downloads are becoming increasingly popular – people will wait several hours for a download if it means not having to go to the store to buy software.

When seeking out turnkey e-commerce solutions, selecting the right provider is crucial. A provider needs to fully understand the market and its trends, as well as the credit card transaction process. A provider should be able to host your product and content, give you a shopping cart, possibly handle web design, and facilitate payment processing with credit cards as well as alternate forms of payment, for customers who may not have access to credit cards. Keeping up with marketing trends is especially critical, given the pace at which things change on the Internet. Marketing channels on the Web can come and go in an instant, so having a trend-savvy provider is essential.

A turnkey solution provider must also be able to secure your content. This means that only authorized people have access to your content – for software companies and online music distributors, this may include digital rights management and anti-piracy measures, or secured member areas for subscription-based services. This will prevent content from being stolen, viewed or accessed without being properly paid for.

Good business ethics and practices are essential for any turnkey solution provider. If, for example, a provider is sloppy with credit card transactions, your business can be severely disrupted; sometimes catastrophically. The manner in which a company conducts itself is generally a strong representation of the quality of service provided to customers.

A provider that conducts itself well, gives prompt and helpful service, keeps up with market trends, and is effective in securing and distributing your content will be the strongest choice for your business.

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Jake Powers is the Vice President of E-Commerce for EC Suite; a leading provider of complete e-commerce solutions, affiliate management, wholesale bandwidth, and content protection. Learn more about e-commerce at http://www.ecsuite.com/.


Search Engine Optimization: Building a Tourist Attraction

January 8, 2008

Lion shares of niche markets continue to be carved out. However, the dotcom hype is long over and no longer can business models be content with merely having a Web site out on the internet to elicit continued success. Business providers have become increasingly savvy, dishonest Search Engine Optimization practices have become increasingly shrewd, and Search Engine technology has become exponentially more intelligent.

A Web site is essentially your online brochure pushing sales and information to the World. In this light they are tremendous tools which, if built and tuned properly, can:

-Free up staff time

-Free up valuable budget resources

-Generate increased revenue

-Generate larger market share

-Generate increased brand recognition

-Facilitate increased customer satisfaction

If you are a small business, understaffed, or lack the knowledge, a reputable SEO/SEM consultant can set you on the path to self-reliance. Otherwise, what these B2B opportunists offer is nothing that cannot be done internally by knowledgeable staff with the available time to implement necessary strategies. Once properly established, maintaining one’s Search Engine Strategies (SES) should not average you more than 15 minutes a day. Below is an overview of some simple strategies you can immediately employ toward your Internet presence without a huge investment. Where you go from there is up to you.

Cleaning House
If you want to design the Sistine Chapel of Web sites you better have a solid foundation. That starts with clean, simple code free of complexities. Search Engines shouldn’t have to struggle with your code structure. Present them with an easy, top-down design filled with relevant link bait. I know it is easy to sometimes sacrifice quality for speedy edits or allow deprecated code to clutter its way into your Source, but all this evolves into a Frankensteinian abomination of code making for an unfriendly host to Search Engine spiders.

What’s Under the Hood
While no one strategy can significantly increase your Search Engine Result Page (SERP) position, the culmination of the strategies herein can certainly improve your chances. Let’s begin this category by discussing the domain name (i.e. foo.com). It’s the most relevant and it’s within your control. While your business name is a logical choice, consider choosing a one or two word industry buzz-word for your domain name.

Review your page titles and META tags. While different Search Engines consider and ignore different things, most still value these HTML staples. Many people just place the same tags on every page. Big mistake! You are essentially helping your multi-page Web site appear more like a single Web page. Search Engines will already spider well-indexed Web sites. So, target each page with a specific two/three word key phrase relevant to the respective page’s content. In turn, you need to place relevant content on those pages with the key phrase and its supporting keywords logically mentioned a respectable amount of times. But, be careful – I said “logically.” Saturating your own content with a keyword/phrase will actually work against you. As stated earlier, Search Engine technology has become exponentially more intelligent.

The Search Engine Sherpas
Search Engines spiders are not only looking for relevant content and an easy way to index it, they are willing to take instruction on how to do so. Two road maps that spiders look for are a robots.txt file and XML sitemap. Wouldn’t it be nice, for example, to predetermine which pages may be indexed and which Search Engines may index them? You can. It’s called a robot.txt file. There is, however, a caveat – This is not a way to control access. It can, by all standards, actually alert evil-doers to sensitive areas of your site. View this feature as merely a “No entry” sign for Search Engines. Why list it then? Well, we are talking about optimizing your pages for Search Engines and not security. If you want secure data, I trust you will take advantage of server-side authentication to make it happen.

So, you have an idea of how to use a sitemap, but what is an XML sitemap? While a sitemap at the top of your page makes for convenient user interaction and speedy indexing, the addition of an XML sitemap goes beyond the page layout of your Web site. It holds a set of instructions answering some of the Search Engine’s most pertinent questions: What pages have changed? When did they change? And lastly, how often will they change in the future? But, to add icing to the technological cake, you get to categorize each page’s priority against the others on your Web site. When addressing content, there is only one temptation a Search Engine spider likes more than relevant content, and that’s dynamic content.

Content is King
You’ve made the packaging pretty and baited the Search Engines, but they still don’t care about you. How sad. You’re a nice person and your site looks great! What’s the issue? It’s most assuredly your content. Search Engines want to spider relevant content and binge often on dynamic, relevant content. Not only that, they further weight your content by grading the relevancy and importance of who’s linking to you, who’s linking to who’s linking to you, and if you are linking back to these sources. Yes, most Search Engines’ algorithms weigh you as more important if your relevant links are inbound only instead of reciprocal. Thankfully, the benefits of monstrous link pages and Web rings became extinct long, long ago, burgeoning forth the need for intelligent design.

You Can Lead a Horse to Water, but…
By no means is this overview complete nor is it a point-and-shoot solution. It is a beginning step to your understanding of Search Engine Optimization. Web sites are an ongoing case-study of log review, revision, experimentation, and education of emerging Search Engine technologies. However, the overall Return on Investment (ROI) is well worth it.

What? SEO is Dead?
I’ve heard a few industry people mention SEO is dead. I personally cannot see this point, but there is certainly room to disagree in the world of Search Engine Optimization. I can see that SEO has taken a backseat to Search Engine Strategy (SES) and Search Engine Marketing (SEM); however, SEO’s importance is still vital! Your Web site is the starting and ending point for your Web marketing efforts. It is the foundation for the traffic your efforts intend to drive through your Web site. With a strong foundation, highlighted by the points above, your Sistine Chapel of Web sites is sure to consistently attract and serve visitors for years to come.

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Look for future articles on “clicks-to-cash”, “Guerrilla Marketing”, and more.

Lance Hendershot is the Education and Marketing Manager for CWIE Holding Company; whose subsidiaries are leading providers of credit card processing, affiliate management, wholesale bandwidth, content protection and other e-commerce solutions.


Performance Caching: Content Delivery Networks

January 8, 2008

As online business owners and IT professionals, we like to stay on top of things — it gives us a reason to get up in the morning. Something we always want to know is how we can improve the Internet experience for our customers, and make our own jobs easier at the same time. The solution is simpler than it may first appear — a Content Delivery Network, or CDN, is a highly efficient and cost-effective aid in the distribution of digital content over the Web.

In a typical Web server environment, all requests from users are sent to the same server, known as the origin server. The origin server processes all user requests and distributes content accordingly. This works out fine for most Web sites; however, when large quantities of content such as music, video, applications, and other downloads are being served each day, the load can potentially overwhelm and bring down a single server. This will often result in the need for more powerful server equipment and increased bandwidth to support the growing need, which can be very costly and time-consuming to implement and maintain. Using a Content Delivery Network with content caching technology, performance of your Web site is dramatically improved for all users with no extra hardware to implement, and the network backbone is already in place, making the overall network implementation time very small.

Content caching is the technology that drives the CDN. Essentially, a CDN is a network of servers that are strategically placed in such a way that there is at least one caching server, known as a CDN node, in every region of the world. This way, there is a CDN node close to each individual end user. Under the CDN model, when a user visits your Web site and requests content, that request actually goes to the nearest CDN node. The node then checks to see if it has the content requested; if it does not, a request will be made back to the origin server to retrieve the content. A copy of this content is now cached on that node, so that when users in the same region request the same content, that content is served by the CDN node rather than the origin server. This splits up the load between all nodes on the CDN, so the only requests made to the origin server come from the CDN nodes themselves, greatly increasing site performance while taking major pressure off the origin server. The distance factor plays a part as well; the CDN node is much closer to the user than the origin server, so content loads much quicker due to the reduced distance that data must travel to reach the end user. In addition, because the CDN uses its own backbone, it is not susceptible to Internet congestion, and the reduced pressure on the origin server decreases the need to spend money on additional server hardware.

The advantages of a CDN are not limited to customer satisfaction and server performance – there are a host of other benefits as well.

An ever-pressing issue concerning online businesses is that of sudden surges in traffic, known as flash crowds. Flash crowds can be anticipated, such as in the event of a big sale or product launch, or they can be unanticipated, whether appearing randomly or as a result of unexpected media attention, such as a story on the news. Flash crowds can be difficult and costly to plan for, due to the need of installing more robust server hardware to handle the excess traffic. This extra hardware often goes unused because flash crowds may not occur frequently. Using a Content Delivery Network, however, the extra traffic is offloaded to the CDN nodes caching your site’s content, so the origin server is at little or no risk of being overloaded and there is no need to buy extra hardware. This load-balancing technology not only increases site efficiency, but also extends the life of your server hardware.

Security can be a very potent feature of a Content Delivery Network. The origin server holds information that is vital to the operation of your business, and that content must be protected from Web attacks. Using a CDN, the origin server can be “hidden” from the Internet by a group of CDN nodes, and only the IP addresses of those particular nodes will be able to access the origin server. All requests for content from the origin server will be sent to those nodes guarding it; those nodes will then request the content from the origin server and send it back to the original requesting node.

Another benefit of a CDN is global availability of content. In the United States, Internet infrastructure is everywhere; bandwidth capabilities are virtually limitless. Transferring content over the Internet using a CDN in the United States can increase Web site performance by up to a hundred percent. In Asia and other parts of the world, such capabilities are far more limited due to a lack of public infrastructure; using a global CDN, however, these limits are essentially removed. Content can be delivered all around the world using caching servers and the CDN backbone, allowing countries outside the United States to view content with a level of performance that would not be possible without the aid of a CDN. This allows online businesses to effectively and efficiently serve customers worldwide.

Performance, availability, and security are the primary functions of a Content Delivery Network, but its benefits stem far beyond those. The network is already in place, so implementation time is low, and no extra server hardware is needed; at the same time, your Web site’s performance is greatly increased, and content is made more readily available. A CDN gives online businesses an avenue to deliver content quickly and efficiently to all corners of the globe, making it an ideal solution for any content-driven business.

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Brian Lowy is a CDN Account Executive for EC Suite; a leading provider of Content Delivery Networks (CDN), wholesale IP Transit, IP Transport, website hosting, and content protection. Learn more about Content Delivery Networks at http://www.ecsuite.com/.