Christian Chmiel, Web Shield: "As an anti-fraud vendor, we see fraud evolving every day"

One of your main areas of interest is due diligence – why is an automated solution a life and time saver for acquiring banks?

Most acquiring banks, payment service providers and financial institutions, see due diligence more as a chore. Know Your Customer procedures take up time and resources that many organization would rather spend on customer acquisition. As a result, thorough due diligence sometimes falls by the wayside. The results: painful fees imposed by credit card schemes and regulators or, in the worst cases, loss of license.

Our mission as an anti-fraud vendor has always been to reconcile speed and investigative depth to offer time-efficient but effective risk assessments and most importantly, help our customers make informed decisions about their customers.

You have been organizing a course on “Investigation Techniques for Merchant Acquirers” for two years now. How important is it for acquiring banks to know and understand fraud and how to fight it?

It is an essential part of an acquiring bank’s business to provide companies of all persuasions access to the credit card system. This does not only entail a moral responsibility to root out bad actors, but also more concrete obligations to laws and credit card scheme regulations. A bank has to know the legal environment in which it operates and the red flags associated with specific business models, otherwise it is bound to get into hot water eventually. We believe trying to avoid boarding fraudulent merchants to the best of your ability is not only a good idea from a business ethics standpoint, but can actually be a competitive advantage – because fraud cases can hurt your reputation even more than your bottom line.

What are the main reasons behind acquirers’ and merchants’ need for a consulting service in order to assess and monitor fraud risks?

As an anti-fraud vendor, we see fraud evolving every day. Cybercriminals are ingenious in finding new loopholes. While anti-fraud tools like our own offer solid protection most of the time, they are no panacea. For identifying unprecedented fraud scenarios and developing mitigation strategies, for example in the field of transaction laundering, it is always helpful to consult a second opinion from experienced investigators.

How difficult is for merchant acquirers to implement a risk-based monitoring approach? Is there an easy solution for this?

The fact is: monitoring is more necessary than ever. The product portfolios of ecommerce merchants, for example, can change daily; even if you just confirmed that a merchant does not sell illegal goods, the assessment can look completely different the next day – and the problem gets even worse when you are dealing with user-generated content.

To reflect the risk-based approach, which is currently embraced by credit card schemes and regulators alike, we decided to make our automated monitoring solutions more adaptable. Usually, tools would just allow you to set a monitoring interval – with our PULSE solution this also goes for the investigative depth. PULSE is also the central reporting platform, where our customers are notified about any significant changes of their merchants or websites.

You have attended both MPE and EPS events. Which are your main takeaways and how are they going to impact your company goals/ strategy for the following years?

Conferences are a hotbed of knowledge and expertise. I was lucky to speak at both events and had the opportunity to talk with leaders of the industry. The main takeaway for me was that there is still a tremendous amount of curiosity concerning innovative underwriting and online investigation techniques out there. Our goal therefore is to continue raising awareness and spreading knowledge, for example through our Web Shield Academy, to help our industry as a whole to better deal with risk and fraud.

About Christian Chmiel

Christian Chmiel is the CEO of Web Shield. He is responsible for the development and implementation of new investigation techniques and research tools to identify fraudulent or brand damaging online merchants. Before he served as the Deputy Head of Compliance with Wirecard Bank in Germany, and specialized in online fraud investigations, credit card compliance and underwriting for acquiring banks. Christian is a Certified Fraud Examiner (ACFE) and a Certified High-Risk Underwriter (WSA). As a lecturer at the Web Shield Academy he has written and co-written a series of publications about various aspects of risk management, fraud detection and investigative methodology.

About Web Shield

Web Shield equips the payments industry with tools that protect your business from merchants involved in illegal or non-compliant activities. Our highly precise, software tools provide you with the information you need to make valuable decisions about prospective clients, and alert you when existing clients behave dubiously. Keeping your business out of risky situations – and saving you time and money.