Guard Your Profits: Lynk's Counter to Growing Payment Fraud

Fraud remains a grave concern, posing serious risks that have the potential to dismantle businesses. It is not just a blip on the radar; it's a growing threat with escalating numbers each year. Specifically, payment fraud is on the rise, and credit cards are often the Achilles heel. According to the Federal Trade Commission (FTC), in the year 2021 alone, a staggering 389,845 reports related to credit card fraud were filed. Furthermore, research from CyberSource revealed that businesses lost an estimated $6.7 billion to payment fraud in the same year.

To outpace this alarming trend, businesses must embrace vigilance and innovation. Enter Lynk, a next-gen payment solution that has significantly reduced susceptibility to several common types of fraud. In this comprehensive article, we will dissect four prevalent forms of fraud that Lynk is designed to counter effectively, while also delving into the mechanisms that make it a secure option for your transaction needs.

1. Chargebacks

Chargebacks, or the reversal of a credit or debit card transaction initiated by a bank or card issuer, pose another challenge. Forbes states that the majority of chargebacks fall under one of these categories:

• Unauthorized or fraudulent use

• Misrepresented goods or services

• Undelivered goods or services

• Unprocessed return credit

• Ongoing billing for a canceled subscription

• Incorrectly charged amounts

Chargeback fraud, also known as "friendly fraud," occurs when a consumer makes an online purchase with their own credit card and then requests a chargeback from their credit card issuer after receiving the purchased goods or services. Essentially, the fraudster tricks the system into thinking they are entitled to both the refund and the item or service. This practice is deemed "friendly" because it originates from what appears to be a legitimate transaction, rather than clear-cut cases like identity theft or account takeovers.

Lynk's Solution for Chargebacks

Unlike conventional payment methods, Lynk operates on the Automated Clearing House (ACH) framework. This system replaces chargebacks with unauthorized returns, and fraudulent returns can result in hefty federal penalties, including fines up to $1 million and imprisonment under 18 U.S.C. §1344. This additional layer of accountability discourages fraudulent chargebacks, effectively lowering the rate of illegitimate returns by 18%, according to a study by Aite Group.

Additionally, Lynk’s proprietary payment authorization flow, which is both a bank and Federal reserve approved method, fingerprints each transaction and makes it impossible for a purchase to not have originated with the intention of the consumer and with their explicit approval. This process ensures that parties on all sides of the transaction are protected.

2. Identity Theft

Identity theft can range from data breaches to insider theft, social engineering, malware, and even vulnerabilities through unsecured Wi-Fi networks. A 2023 bust of an identity theft ring in Montreal illustrated the global ramifications of such fraudulent operations, impacting people and businesses across 17 countries.

Lynk's Advanced Security Measures

Lynk employs a robust framework based on open banking protocols, using Application Programming Interfaces (APIs), advanced encryption algorithms, and machine learning algorithms for real-time monitoring and identity verification, which reduces the risk of identity theft by up to 47%, according to Lynk's internal metrics.

3. Card Skimming

Card skimming remains one of the most pervasive forms of fraud, affecting consumers and creating ripple effects that often financially drain merchants. In the United States, the first half of 2022 alone witnessed an over 700% surge in incidents of card skimming, according to a report from Javelin Strategy & Research.

What is Card Skimming?

Card skimming involves illicitly obtaining a consumer's credit or debit card information through a skimming device, discreetly attached to ATMs, gas pumps, or even in-store payment terminals. The criminal later extracts this data to clone cards or make unauthorized online purchases.

For instance, in June 2022, a customer at a 7-Eleven store in Oakland, California, identified a skimmer when he noticed that the ATM's keypad buttons felt different. The quick realization helped avert potential fraud. These devices, often as inconspicuous as small cameras or fake keypads, can wreak havoc when unnoticed. A single skimming device can capture hundreds of cards in a day, which can equate to tens of thousands of dollars in fraudulent transactions for businesses.

How Lynk Counters Card Skimming

Lynk's Pay by Bank feature negates the need for physical cards altogether. Instead, the customer directly logs into their bank account, going through additional layers of verification such as passwords, biometrics, or multi-factor authentication. Once authenticated, funds transfer directly from the consumer’s bank account to the merchant's account, bypassing the traditional card infrastructure susceptible to skimming.

4. Phishing

Phishing scams can jeopardize businesses by tricking employees or consumers into divulging sensitive information. Cybersecurity expert Bree Fowler advises extreme caution with unsolicited communications as a preventive measure.

How Lynk Addresses Phishing

Lynk enhances transactional security through multi-factor authentication. Even if a criminal manages to obtain login credentials, they still require additional verification methods like facial recognition or a secondary device, making phishing attempts significantly less effective.

Build a Safer Business Environment with Lynk

Both businesses and consumers stand to gain from fraud prevention measures. Lynk not only ensures high-caliber security but also engenders customer trust by safeguarding their data.

To discover how Lynk can fortify your business against the multifaceted landscape of fraud, get in touch with us today by clicking here.