Sept. 4, 2024
I'm a hardcore card testing hater. Card testing is a growing problem online wherein fraudsters use stolen cards to make small, nonsensical purchases to see if the card works. It's not just costing you money--it can be the start of damaging your reputation, leading to ongoing grief for your business, especially if your average transaction values are small. I'm going to demonstrate in this blog how you can stop it, saas card testing in particular, by explaining how they do it in the first place, and what you can do to prevent them. The more you can put in place to prevent methods of card testing, and the more you know the methods, the safer and more effective an environment you can create for you and your real customers.
Card testing, also known as carding or account testing, is when bad people take stolen credit cards and see if it's still good by doing a tiny transaction. They're essentially using stolen credit cards to do a small transaction to see if the card still works, meaning that they're testing to see if the stolen credit card is still active, so that they can use it for bigger purchases down the line. This way, they can see if the card works, if they can use it for high-ticket items, and without the risk of getting immediately caught.
It's not just the direct financial loss of card testing; there are other drawbacks to it. As a business, when someone does a tiny transaction, you're basically introducing an opportunity for abuse with very little upside. For example, if someone is doing a $1 transaction, you're probably not looking at it as risk the same way you would if someone is doing a $10,000 transaction. So, for these small transactions, you're not going to have the same level of scrutiny or fraud detection applied as you would for a big purchase. What you're doing is opening up a much less protected opportunity for someone to abuse your business without you noticing.
Scammers know that businesses that process low value transactions are the best targets for card testing. These small charges often go unnoticed, slipping through the cracks of automated systems, or they’re accepted without review by employees. This is the ideal scenario for scammers testing many cards at once. For businesses accustomed to seeing—and accepting—small charges without review, it’s just as easy to test many cards as it is to test one. You can have e-commerce platforms, subscription services, or digital marketplaces, for example, that do not closely monitor small transactions and are easily exploited. When scammers test many cards one after another, the likelihood that it will be caught is far lower. Not only do they increase their odds of finding valid card data, but they can increase the number of cards they test without drawing attention from the business or law enforcement.
Card testing is a big problem. It's not just the losses businesses face as a result of these small fraudulent transactions, it's the extra operational costs that come with them. Every failed attempt brings a business closer to a chargeback, which aren't just expensive—they're time-consuming to resolve. Plus, businesses may have to deal with their credit card processor, which can mean pricier transaction fees, or worse—account termination for repeat fraud violations. Ecommerce fraud was projected to cost businesses over $48 billion globally in 2023.
The impacts don't stop there, however. On top of the short-term financial hit, businesses that are card tested again and again can suffer a poor reputation and drive away potential customers searching for secure payment options. Once consumers find out a business has fallen victim to card fraud, trust can plummet, and they'll take their business to a competitor they feel is "safer." Trust lost can add up to be a real big problem, and businesses will have to invest a lot of time and effort to earn that trust back and mitigate risk against future attacks.
By knowing what card testing is and how it can impact them, businesses can take action to layer strong security solutions that not only stop fraud, but that protect their reputation and revenue.
Card testing is a way fraudsters check if stolen cards are live and work. And you should understand what these various methods are so merchants and card issuers can stop them and not lose money. There are 2 primary types of card testing that have been observed over the years: small payments and authorization checks. These give fraudsters a way to determine if stolen cards are live without alerting the true cardholder right away.
Small payments are exactly what they sound like: low-value transactions ranging from a few cents to a few dollars—usually around USD 1. Why so low? It's low enough that cardholders are unlikely to notice the charge, making it easy for the fraudster to check if the card is live and can be used for higher transactions later on.
These can be done on different platforms like e-commerce sites, subscriptions, where things are frequently bought. For instance, if a fraudster does a small payment on an online store, they're just checking if the card works. If it goes through, they can safely use that info to make higher payments—essentially doing a low-risk check that could turn into high-scale fraud.
You'll want to watch out for these small payments and be prepared, since recurring low-value transactions are an indication of card testing. You'll also want to keep an eye on the transaction history and flag any unusual spikes in small transactions, which would be a proactive way to prevent fraud.
Authorization checks are another very common way that people test cards. Instead of making a small payment, in an authorization check you check to see if there is enough money in the account without taking any money out. And that's because they're using this to test if a card works, because they want to use it to buy things in the future (and they want to make sure it will go through!)
The problem with authorization checks is that it's very sneaky. Since they're not taking any money from you, you might not even know that they're checking your card and validating it! That's how they get away with it, and that's how they can legitimately use a card while remaining under the radar. This can be extremely costly to merchants—especially ecommerce merchants—because they'll have higher chargeback rates once they do catch on to the fraud.
One way a merchant can protect themselves from checks is to beef up their monitoring. The merchant can make it more difficult to check for authorizations by adding an extra step (multi-factor authentication) or other way to prove that it's actually you. Also, a good risk analysis that looks at historical data can be a good tool to decide if the transaction is fishy or not.
It's a fine line to walk to stop fraud, but not make it hard for your real customer to do business with you. With the right systems in place that do not slow down good transactions, a merchant should be able to accomplish this.
Understanding this sneaky behavior of card testing can help you defend yourself, and vigilance is the key: the threats to payment security are always changing; the only way you can stay ahead is to be prepared.
If you sell online, you'll definitely want to know what 'card testing' attacks are. In a nutshell, bad actors attempt to validate stolen credit cards by running lots of low-dollar-amount transactions. The consequences can be significant, in terms of both dollars and your good name.
Once, a merchant was excited to see a bunch of low dollar transactions, because they didn't expect them. It was a sophisticated credit card testing attack. By the time they were done, it had cost the ecommerce merchant over $10,000 in chargebacks. A chargeback is when a customer disputes a charge on their credit card and the merchant refunds the money. Not only do you lose the funds immediately, you get fined and usually pay higher fees. So if you ever see a bunch of low dollar transactions that you didn't expect, that should be a red flag to you to check for fraud.
For ecommerce businesses, a lot of low dollar transactions could trigger the payment processors' automated algorithms to take a closer look at your account, which means more expensive fees for you in the form of additional risk from the payment processors. If this continues, it could now classify you as a high risk account, and the credit card companies may start charging you additional fees or imposing restrictions.
It's pretty cool. You can set it and forget it. It'll block a bunch of those edge cases that'll nibble away at your margins - and it gets better over time!
In preventing carding attacks, you need many layers of protection. You need tools to help prevent or make it difficult for someone to easily run a small test transaction. Preventing small transactions with minimum payment, using Google reCAPTCHA, customer accounts, these all help prevent a lot of this activity.
But you also need to watch out and you need to change. You need to prevent not just that small fraud, but also change your settings and tools as the attacker changes to bypass your protection. By being proactive and taking the above steps to protect SaaS card testing, you can reduce your exposure significantly, while still making it easy and safe for your good customers.
In e-commerce, the only constant is change, and card testing fraud represents a major risk. As scammers become increasingly sophisticated, you need to be able to adapt your strategy to keep yourself protected. In this post, we'll be examining the strengths and weaknesses of different card testing mitigation strategies so you can determine how to best protect your business.
Advanced fraud detection gives you a huge head start to card testing newbies. Fraud detection systems look at transaction patterns and identify anything that looks 'funny'. For example, they might notice that there are a ton of declines. Or they might notice that all of a sudden a ton of transactions are coming from a place the real cardholder isn't (okay I'm exaggerating a bit... you get the idea).
The cool thing is that these tools can massively reduce the number of successful card tests. When merchants are able to detect and block suspicious transactions in real-time, they're building a wall that people who are trying to steal from them can't climb over. A good fraud detection system not only protects the integrity of the transaction, it doesn't let fraud win. Everyone wins.
And if you continue to update and enhance your fraud detection, you can maintain that lead and stay ahead of future fraud. By continuously improving your algorithms and monitoring new fraud trends, you can foresee how fraudsters might attack you in the future.
Another way to stop bots from running automated carding scripts is to use rate limiting and CAPTCHA. Rate limiting lets you set a cap on how often someone can attempt a given action on a particular customer account. For example, if a person tries to submit 100 transactions in 1 second, you can stop them from submitting any more transactions for a period of time. This means you can stop bots, but also hold people accountable. CAPTCHA also ensures it's a human that's interacting with the page. By making people solve a puzzle (like identifying objects in images) the merchant can ensure only real customers are submitting transactions, not scripts. If you put rate limiting and CAPTCHA together, the merchant can totally stop unauthorized carding. When you use rate limiting and CAPTCHA together, you're not just increasing security, you're making ecommerce better for everyone. When your customers feel safe, they're going to do more on your site, and that means more sales for you. So, it's not just good, it's good for business.
Card testing protection is a good thing, but there are downsides, usually in the form of false positives. Some anti-fraud systems may mistakenly identify legitimate transactions as fraudulent. For example, a high-dollar value transaction made at an unusual time and from a new device may be flagged by the system and blocked.
This results in a poor customer experience and the merchant loses the sale. The merchant risks alienating legitimate customers who feel it's too difficult to transact with the merchant. It's a balancing act between security and allowing genuine customers to pay.
Protecting against false positives is generally a process of watching and learning over time, and making allowances for your good customers until you can fine-tune your detection systems so that you only see the bad stuff and not the good stuff.
Security measures are important to protect your business, but no merchant wants to inconvenience their customers. The more security checks you have in place, the more hoops your customers have to jump through. The longer the time-to-transaction, the more likely a shopper will give up and cart abandon—and you'll miss out on the sale.
And—let's be honest—shoppers are kind of fickle. You don't want to weigh down the payment process with too many checks, or they'll take their business elsewhere. Shoppers are willing to pay for peace of mind, but not if it means a less-than-ideal checkout experience. At the end of the day, you'll want to leverage card testing protection in a way that's invisible to your customers. Or if not invisible, at least not something they'll mind.
One way to do this is by A/B testing different levels of security with your actual customers, and leveraging those learnings to strike a balance that helps you get better at security rather than getting in the way. This might mean continuing to pare down security steps that don't add much, or it might mean tweaking the timing and frequency of security messages.
Balance is key when it comes to card testing prevention. Striking the right balance between security and friction is everything. A happy medium of high-fidelity fraud detection and a smooth process will help you minimize fraud and maximize your sales and customer satisfaction.
As e-commerce grows, card testing is becoming more and more of a problem. And you need to protect yourself from it. Card testing is when bad guys use stolen credit card numbers to make small transactions to see which cards are still active. And it can mean a lot of lost revenue for merchants, especially smaller businesses and non-profits that may not have good security. Here are some best practices to help you fight this fraud.
One way to protect your checkout process is to put a CAPTCHA on your checkout page. Basically, CAPTCHA is a gate that stops automated requests (like card testing) in their tracks. Done well, it'll only add extra actions for users to complete -- for example identifying objects in images, or typing out distorted text that the bots trying to solve it won't be able to. And in so doing, you've added a layer of protection to keep any bot-based attack from taking advantage of that vulnerability in your system. So not just card testing, you've just added another step in preventing all sorts of automated fraud.
In addition to using transaction limits to protect against card testing by limiting the spend or transactions on a single card, you can limit the spend or transactions on a single card to prevent the fraudster from testing lots of cards. Also, when you force customers to jump through hoops before they can buy something, you can add another layer of protection. By asking for more information about who your customers are, you're putting up a barrier that makes it harder for fraudsters with stolen card details to make anonymous purchases. That means you're not only protecting money movement, you're also creating a stronger relationship with and trust from your real customers.
Looking for transaction patterns can be a key way of catching card testing. If you can set something up to watch what transactions are happening, like buying something for a dollar from 100 different credit cards within 3 minutes, you can catch this very early, which means merchants can act fast to stop these transactions before it ramps up. You can set up alerts to let your team know that something is happening and respond even faster.
In a digital environment, internal security alone might not cut it. Third-party fraud monitoring can help you increase detection and reduce risk. A lot of solutions use sophisticated algorithms to analyze your transaction data and flag anything that looks suspicious. They'll deliver real-time alerts, calculate risk scores on the fly, and produce a useful report that keeps you updated. Many are designed to work with your existing payment processing systems, so you can get set up quickly and with minimal interruption.
Lastly, you need to keep up because fraudsters are always changing tactics and always finding new ways to poke holes in your security. What was a well thought out defense could quickly become obsolete due to the latest best practices and the latest threats. Regularly audit your security strategies and update them as needed. You also need to keep up with the latest compliance for the payment industry, because following these rules not only builds trust with your buyers but also keeps you out of legal trouble.
So it's a multi-layered approach to block card testing and enhance your security generally. Do all of these things and you'll be in a good place to protect yourself from fraud, and your buyers will be in a good place to buy from you safely.
Credit card testing, or carding, is a fraud tactic that allows bad actors to test stolen credit card data by making small charges to it. Because this testing is done in small-dollar amounts, it allows fraudsters to find active cards to either use fraudulently or sell without being detected. It presents a major risk to businesses, who can lose money from chargebacks and lose customer trust when they don't feel safe being paid anymore. Card testing (e.g. small payments, auth checks, etc.) can take many forms and often occurs where small-dollar amounts are "invisible" (e.g. e-commerce, subscription services, etc.). Businesses can help prevent it with tactics like CAPTCHA, transaction thresholds, and third-party monitoring tools. They can also help prevent it by continually fortifying their defenses against new fraud trends. With these tools and a careful eye on the small stuff, businesses can protect their bottom line and their customer relationships.
Credit card testing, or carding, is when criminals test if stolen credit card details are usable by making small purchases to check if the card is active. If it is, they can use the details to make bigger purchases later without being blocked.
Fraudsters will often target low-ticket businesses because they tend to be less stringent. Ecommerce platforms, subscription services, and digital marketplaces don't ask questions about small charges, so fraudsters can "roll the dice" on a stolen card over and over.
The financial impact of fraud is massive--the cost of small fraudulent transactions, more chargebacks, higher transaction fees, and potential damage to reputation. As fraud rates rise, businesses may face scrutiny and higher costs from credit card processors, as well as decreasing consumer confidence.
There are two main methods: small payments and authorization checks. Small payments are where you charge a very small amount of money, like 10 cents, to see if the user's card works. For an authorization check, you're checking to see there's money in the card without actually processing a transaction. These let fraudsters check to see if your card's still active without your knowledge.
One example is a small e-commerce platform that saw over $10,000 in chargebacks due to a flood of low-value transactions that looked like card testing. Another example is a non-profit that had a bunch of small transactions from different IPs that was putting financial strain on them and damaging their reputation because they were getting extra scrutiny and costs from payment processors.
Businesses have access to loads of fraud protection: using CAPTCHA to help stop bot attacks, setting transaction limits, requiring user accounts, manually reviewing transaction patterns, using third-party fraud monitoring tools, constantly updating security, and much more. All of which helps create a multi-layered defense against fraud.
While advanced fraud detection tools can help flag potentially risky transactions, they can also lead to false positives, where legitimate transactions are declined. This can frustrate your customers and result in lost sales. It's a tricky balance because you want to reduce false positives so your customers aren't unhappy.
Pattern recognition in transactions helps to catch abnormal activity like card testing as early as possible. When you see spikes in low-value payments or payments from the same card, you can take action to block it and minimize your losses.
A secure online payment system interface to protect saas card testing
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