Fraud and Risk in the Electronic Payment Space

Michelle Marshall-ThompsonVP, Fraud/Risk Officer

FirstMerit Merchant Bankcard

General lack of understanding within the payment space

• “Authorizations” are not a guarantee of payment• Settlement of funds to a deposit account does not

ensure funds will not be retracted• Inappropriate data verification

General lack of understanding of payment risks

• Chargeback Risks• Financial Risks:

Expense of payment acceptanceLoss exposure after payment acceptance

• Sensitive Data Security Risks:Human behaviorsNetwork risks

Opportunities for Fraud

• Internal Fraud • External Fraud • Network Breach, Data Theft, Fraud

Internal Fraud

• Employee Embezzlement:Fraudulent returnsCredentials theftMisuse of positionMost unsuspecting person

Internal Fraud

• Compensating Controls:OversightPassword protectionPolicies regarding information sharingRandom Google or background searches

External Fraud

• Fraudulent use of card information• Lost/stolen card numbers• Alleged fraud• Merchant financial exposure

External Fraud

• Compensating Controls:Exposure of swiped, keyed & e-commerce transactionsUse of data verification: address, zip, CVVAdditional red flagsWork with banking partners

Network Security Risks

• PCI non-compliance• Human behavior • Banking credential hacks• Wire fraud, sensitive data breach

Network Risks

• Compensating Controls:Utilize the expertise of third parties Work within well established guidelinesOversight of employee responsibilities

Where To Turn

• If you believe your organization/entity could be vulnerable to risks reviewed today, contact me directly at 330-849-8937, for further discussion

• Contact your banking institution to inquire about additional controls and risk mitigating options

• Don’t expect to “go it alone” - work with your partners

Thank you for attending!