Fraudsters pool data to beat plastic fraud checks

TECHNIQUE : Fraudsters pool data to beat plastic fraud checks

By John Leyden

11th June 2008

http://www.theregister.co.uk/2008/06/11/plastic_fraud/

Credit card conmen have developed a technique for making fraudulent purchases in the UK appear more legitimate.

The approach relies on subverting the address verification system (AVS), one of the main components used to verify card purchases. Address verification, along with the card security code number printed on the back of debit and credit cards and expiry dates, is commonly needed to make ecommerce purchases in the UK. The system is also used in the US and Canada but not in countries in mainland Europe.

The address verification system takes the numeric parts of a cardholder's billing address and checks this against that submitted during a transaction. For example if Joe Bloggs lives at 12 High Street, Walthamstow E17 7HQ, AVS will check 12 and 177.

The checks have the potential to flag up transactions where the shipping address differs from the billing address or the billing address submitted is wrong.

However fraudsters have begun exploiting the fact that many addresses can have the same AVS code. By making sure billing addresses and delivery addresses used in scams have the same code they make it more likely that purchases will go through.

Merchants will be none the wiser that anything is amiss until they get hit by chargeback charges after the legitimate card holders complain of fraudulent purchases.

Andrew Goodwill, of credit card fraud protection specialist The 3rd Man, said that it had detected 50 cases of fraudulent purchases made using the technique over the last month or so. Most of these cases came from London.

"Fraudsters have developed a massive cross reference database. It may be the information was drawn from fraudsters sharing data among themselves to the use of social engineering tricks to intimidate call centre staff into handing over details," Goodwill told El Reg. He added that defending against the approach may be very difficult.