AmEx Expands Its Fraud Detection Application to Three Major Platforms

In an effort to stymie card-not-present fraud, which has been on the rise during the Covid-19 pandemic, American Express Co. on Wednesday announced its Enhanced Authorization fraud-detection application is being made available to three major platforms—those of Accertify Inc., Microsoft Corp., and Riskified Ltd.—via an application programming interface.

While the card-not-present channel accounts for 18% of card transactions, it drives 83% of all fraud attempts, according to the “Q2 2021 Financial Crime Report” from risk-management platform provider Feedzai.

AmEx’s software enables merchants to share digital attributes that can help validate a transaction and cardholder, such as the customer’s email, Internet protocol and shipping address, and phone number. Including such attributes in a fraud screen, along with other data gathered by AmEx, can reduce online fraud by as much as 60% and increase approval rates by an average of 50 basis points, AmEx says. The digital attributes are gathered in the background to avoid disrupting the checkout process.

Merchants can share transaction data directly with American Express within the authorization request or via the Enhanced Authorization API.

The breadth of information used by the application makes it easier for merchants to validate a good customer, even if it is the shopper’s first time making a purchase with that merchant. It also reduces the risk of a false positive that could anger customers and negatively impact a merchant’s brand. 

“Bad actors are attacking the digital ecosystem, and that hurts merchants and consumers,” says Tina Eide, senior vice president, global fraud risk for AmEx. “The goal of the integration is to be more accurate when it comes to detecting fraud for online transactions by enabling merchants and card issuers to share more data with each other at the moment an online purchase takes place.” 

Making Enhanced Authorization available to Accertify, Microsoft, and Riskified, whose fraud-detection platforms many merchants already use, strengthens AmEx’s fraud-assessment capabilities on transactions by expanding the reach of the application to a larger merchant base. Previously, AmEx made the application available directly to merchants. 

“We are working with vendors that have a large portfolio of merchants, which lets us expand the reach of card-not-present fraud detection,” Eide says. “Card-not-present fraud has been a problem for some time, but it has grown the past year, which increases the need for a solution to help [more] merchants fight fraud.”

AmEx plans to make the Enhanced Authorization API available to other fraud detection platforms in the future. 

Accertify, which AmEx purchased in 2010 for $150 million, views the Enhanced Authorization app as an additional layer of fraud detection that complements its existing detection tools. 

“By adding on to our machine learning and community data, Enhanced Authorization can help merchants increase approval rates without false positives or negative impact to the customer experience,” Accertify president Mark Michelon says in a prepared statement.