Glossary of Terms

 

Acquirer: Also referred to as merchant bank. These are the banks where on-line companies such as yours must have an account in order to accept credit cards. All CNP transaction credits and debits take place for your on-line business using this account.

 

Association: A large group of “players” in the CNP transaction business. The Association is made up of card issuers… gateways… acquirers and processors. (See each below for definitions).

 

Authorization: A unique number that is assigned by the issuer on every approved transaction indicating that the account is valid and current and that sufficient credit is available to cover the transaction.

 

AVS: Address Verification Service. Basic fraud screening that matches the address information entered by the customer to the address information on file with the issuing bank.

 

CVV2/CVC2: Card Verification Value Code (Visa) and Card Verification Code (MasterCard) The three-digit security code on the back of Visa and MasterCard credit cards.

 

Carder: A term for criminals who use the personal identifying information of a credit card holder to fraudulently purchase items from Internet merchants.

 

Card issuing bank: Also know simply as an “issuer”, a bank, credit union or other financial institution that opens credit card accounts and issues credit cards to cardholders. Issuers also verify cardholder information during the CNP transaction process and initiate chargebacks on fraudulent transactions by performing AVS and CVV2/CVC security code verification.

 

Card-Not-Present (CNP): This term refers to all credit card transactions made with credit card information that is transmitted to the merchant from a remote location, either via the Internet, the telephone or by mail. CNP transactions are considered by issuing banks and credit card companies to be riskier than transactions concluded with the customer physically handing the credit card to the merchant at a Point-of-Sale (POS) terminal.

 

Chargeback: A sale reversal that occurs when a customer contacts his or her card-issuing bank or credit card company to request a refund for a purchase that they or someone else made on their credit card.

 

Credit card company: Visa, MasterCard, Discover, American Express. These are the companies that make the credit card transaction rules for everyone to follow.

 

Cybershoplifter: Thieves who make legitimate purchases on the Internet with their own credit cards and then deny they placed the orders…or claim that the merchandise received is are not what they expected.

 

Diver: A fraudster who sifts through mailboxes, dumpsters and other refuse receptacles for personal identifying information found on credit card receipts, discarded junk mail credit card offers, medical records, employment records, etc. This information—name, address, credit card number, Social Security number, etc—is then used to fraudulently apply for credit cards or to illegally use existing legitimate credit card information to make fraudulent on-line purchases, posing as the actual cardholder.

 

Fraud screeners: An independent company hired by an E-commerce merchant to check for fraudulent CNP transactions. These vendors do not assume liability for fraudulent transactions that somehow make it through their systems.

 

Gateways: A group of exclusive companies authorized to contact issuing banks to verify cardholder information on behalf of merchants. All transactions, including chargebacks, are passed through them.

 

Geo-location: See “IP Geo-location”.

 

Hacker: Carders who are the high-tech whizzes of Internet credit card fraud. They steal confidential credit card information stored in supposedly secure databases of E-commerce companies (or other companies). They then use the stolen information to place fraudulent orders with honest, hard-working E-commerce merchants.

 

IP Geo-Location: Technology that locates the geographical location of an Internet customer’s IP address. The service, offered by several vendors, allows E-commerce merchants to verify the city where an on-line order originates, thereby helping to verify the authenticity of the address information submitted with the order.

 

Issuing bank: See “Card issuing bank”.

 

MasterCard SecureCode®: One of the new Payer Authentication services offered to E-commerce merchants to protect against liability for fraud-related chargebacks. (See also “Payer Authentication”)

 

Payer Authentication: Also known as buyer authentication, this is a service that E-merchants sign up for with MasterCard or Visa. The MasterCard program is called SecureCode; the Visa program is called Verified by Visa. These programs enable you to avoid liability for chargebacks by prompting consumers to share a password with their card issuers at checkout—similar to providing a PIN number for ATM transactions. Transactions in which consumers authenticate themselves to issuers shift liability from the merchant to the card issuing bank.

 

Phisher: A term used to describe carders who deceptively collect credit card information from fake, or “spoofed” Web sites. Typically, they develop a copycat Web site belonging to a well-known E-commerce company such as eBay, AOL, PayPal or Citibank and then send out mass E-mail campaigns falsely informing customers that they must click on the link to these sites to update their credit card information. Consumers who fall for the ploy end up having their credit card information and other personal identifying information “harvested” by the phisher who then uses the fraudulently acquired data to make illegal purchases on the Internet or to commit other identity frauds.

 

Processor: The processor is often the same as the acquiring bank. Or it may be an Independent Sales Organization (ISO). An ISO is a reseller of the services provided by the processor/acquirer.

 

Skimmer: A carder who steals card information, usually electronically, “on the fly” during a transaction. Waiters in restaurants are among the most common skimmers. They use hand-held devices called “wedges” through which they swipe customers’ credit cards, thereby capturing all of the card information contained on the magnetic strip of the card. This information is then used by criminals to make fraudulent on-line purchases.

 

Verified-By-Visa®: One of the new Payer Authentication services offered to E-commerce merchants to protect against liability for fraud-related chargebacks. . (See also “Payer Authentication”)