STORES Magazine - November 2008 - (Page L17)

ONLINE FRAUD Tactical Teamwork Ethoca is bringing e-tailers together to fight online fraud BY D. GAIL FLEENOR n emerging company is preparing to use the power of community to fight e-commerce fraud in a manner similar to LERPnet’s solution for bricks-and-mortar retailers. A While there have been several initiatives to fight the online fraud battle in the past, Ethoca president ETHOCA “MUSTS” Keegan Johnson believes the solution is getting re- Privacy of customer tailers to work together. information Founded three years ago, Security of data Ethoca is building the first Ease of access for international online e-tail- members er community that will Integrity of reporting allow each member to share its history of pay- Usability ment experiences with Open platform other members. Critical mass of data “Since fraudsters work together, we thought businesses should, too, to fight back,” Johnson says. Currently based in Dublin, Ireland, and Toronto, Canada, Ethoca began three years ago by signing e-tail Keegan Johnson customers of the Royal Bank of Scotland (RBS). RBS, which claims half of ing fraudulent transactions to Ethoca; the credit cards issued in the U.K., is the community will share the data. now one of four partners and 35 mer- How exactly will the system work? chants committed to the enterprise. Ethoca “will check the experiences of By noting the solutions that did not all member companies, the history of work against e-commerce fraud, all merchants,” Johnson says, and Ethoca developed a list of “musts” for then “issue a retail risk assessment to its online community. First, there the retailer.” must be privacy of customer informaThe risk assessment will include a tion. Security of data, ease of access score and a recommendation about for members, integrity of reporting, how to handle the transaction. If there usability and an open platform are is an IP address linked to fraud, Ethoalso vital. The final hurdle for a suc- ca will provide this information to retailers and will also note inconsistencessful fraud reporting community, cies, such as a single shipping address Johnson says, is achieving a critical tied to several different credit cards. mass of data. As part of their membership, e-tail- “This is usually a good indicator of ers will securely upload data concern- fraud,” Johnson says. WWW.LPINFORMATION.COM Data encryption Ethoca vows that customer data will be secure. “We are fully PCI compliant,” Johnson says. “We have also put security policies into place. For example, Ethoca encrypts all data, whether it is on our servers or in transmission. The RBS came in and went through all of our policies and procedures prior to becoming a partner.” The solution should also cut down on the number of rejections a store issues. “This will keep fraud under certain levels and not turn away good customers,” Johnson says. “If you’re turning away 6 percent now, it could go down to 4 percent which goes to the bottom line.” Ethoca will charge a monthly membership fee rather than transaction fees. “We don’t want retailers to only send us their riskiest transactions,” Johnson says. “We need all transaction information to get a good picture.” The fee could range from $500 to $25,000, with the selling point being that the system “will pay for itself because we will be adding money to merchants’ bottom lines.” One recent development: former U.S. Homeland Security secretary Tom Ridge has joined Ethoca’s board. “He can give us strategic guidance, having been in an industry that fights fraud,” Johnson says. Among Ethoca’s first U.S. members are Tigerdirect.com and CompUSA.com. D. Gail Fleenor, a Virginia-based freelance business writer, has nearly 20 years experience in retail and consumer research. STORES / NOVEMBER 2008 L17 http://www.Tigerdirect.com http://www.compUSA.com http://www.compUSA.com http://WWW.LPINFORMATION.COM

Table of Contents Feed for the Digital Edition of STORES Magazine - November 2008

STORES Magazine - November 2008 Contents Executive Editor's Page President's Page Every Cup Counts What Shoppers Think Less Park Time, More Shop Time 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Retail Held Captive First Look Concept2Watch Marketing Technology Custom Software PCI Compliance Data Security Arts Update Newsbeat LP Issues: Q&A Cover Story Surveillance Systems Online Fraud Industry Perspective LOEB Retail Letter Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - November 2008

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