Criminals who steal credit or debit cards or make counterfeit ones with stolen account numbers need somewhere to use them without getting caught. At self-serve gas stations, pay-at-the-pump terminals are the perfect place because there’s no clerk involved who might spot the fraudulent transaction.
Conexxus, a technology organization that represents convenience stores and gas stations, estimates that the industry lost at least $250 million to credit and debit card fraud last year — losses that get passed on to customers in the form of higher prices. Conexxus Executive Director Gray Taylor told TODAY this figure is based on a nationwide survey of service stations conducted in 2010.
"The problem hasn't gotten any better since then," he said. "In fact, it's probably gotten worse with all the big breaches."
Visa recently announced that it has developed a solution — Visa Transaction Advisor (VTA) — to spot lost, stolen or counterfeit cards.
“This technology uses predictive analytics to help determine whether this is a high-risk transaction. If it is, then we send a notification back to the pump and the customer is prompted to go inside and complete that transaction,” explained Mark Nelsen, Visa’s vice president of risk products and business intelligence.
VTA analyzes about 500 pieces of data, such as location, past transactions and whether the account has been involved in a data breach, to create a risk score from one to 99. It takes less than a millisecond after the card is swiped to do this.
The gas station owners decide their risk tolerance, not Visa, and what score they want to trigger the alert that tells the customer to see the attendant.
“As soon as we see that high-risk transaction, we also send the issuing bank a notification and they can decide if they want to block that card until the cardholder can confirm that they made that transaction,” Nelsen said.
Before VTA’s national rollout, Visa did a two-month pilot test at 300 Chevron stations in Los Angeles. Chevron saw a 23 percent reduction in fraudulent chargebacks — that's when a customer challenges an unauthorized charge on their account.
“VTA works behind the scenes without any costly infrastructure upgrades and will not change the experience at the pump for the average customer,” said Gabriel Andres Porras, Chevron’s merchant acquiring manager.
About 25,000 gas stations across the country, many of them Chevron, now use VTA. Shell is currently testing the program at many of its stations.
Visa said that it has been tracking the results and found that when a fraudster gets the message to see the attendant, they drive away. They do not go inside and try to make the purchase.
“Enhanced security is always good,” said Adam Levin, chairman of IDentity Theft 911. “Anything that helps spot and stop fraud before it happens is a lot better than having to deal with the consequences after it happens.”
Taylor thinks the Visa Transaction Advisor will be a huge help to service-station operators. The use of stolen card numbers is the biggest type of fraud they face.
“It’s addressing and draining a real swamp that we’ve had for years,” he said.
It’s not uncommon for a credit card crook to pull up to a station with a pickup truck that has a 500-gallon tank on board, Taylor said. Using counterfeit cards, they can fill the tank with diesel and then sell it for close to the street price to small business owners looking to save some money.
To compensate for the loss, a gas station would have to sell 5,000 to 7,500 gallons, he said.
Visa is already looking for the next best location to deploy its new software, possibly ATMs or kiosks that sell expensive items. Another potential market might be e-commerce. Online merchants are a prime target for payment fraud because card authentication is much more difficult with online transactions.