High-risk transactions and their effects on customers

In today’s world, where a bunch of transactions are made online with just one click, there are high risks of being involved in scams. Although it is true that a lot of companies ensure the security of your transactions, there are always chances of losing your funds easily. In order to discuss these things in more detail, let’s first define some things. 

What are high-risk transactions? 

So, what can be considered high-risk transactions? These are dealings that you enter into with a high risk of loss. When you buy trash bonds, for example, you're doing a high-risk transaction since there's a good chance you'll lose all of your money. Other than that, due to the restricted ability to identify the cardholder as genuine and the anonymity of the purchasing process, online or Mail Order/Telephone Order (MOTO) transactions entail a higher risk of fraud. Purchases where your consumer provides their credit card information over the phone, over email, or through the mail are some of the best examples.

Alternatively, higher-risk customers are the ones that work in specific professions or use banking services/products that have a high risk of money laundering. 

Digital World 

According to the GSMA, digital financial services are expanding rapidly, with more than 250 different products presently servicing 300 million consumers in developing nations. However, recent researches find out that customers’ experiences with risks and how these risks affect their trust, acceptance, and use of services, are actually affecting some financial sectors all around the world. 

Consumers in Uganda, for example, say that the dangers associated with network and service instability keep them from utilizing mobile money. In Tanzania, lapsed users – those who have been inactive for at least 90 days – claim they only use digital financial services in emergency situations since their recourse alternatives are limited and they are afraid of making a transaction error they can't fix.

Examples

So, how can you experience financial failures related to high-risk transactions? 

1. Transactions are unable to be completed because of network or service outages - This is the most often mentioned concern, with 59 percent of Ugandans and 52 percent of Kenyans reporting service outages. It can lead to dangerous client behavior meaning that you might have to leave cash with an agent who will make a transaction later when the network is restored. 

2. User interfaces that are confusing and complex - This problem commonly results in user errors, such as sending money to the wrong number, which is difficult to fix and frequently result in financial loss. Many consumers request assistance with purchases because of menu difficulties, which requires them to divulge confidential information (such as their PIN) with an agent, friend, or family member. 

3. Fees and other terms are not transparent - Customers are left vulnerable to agent misconduct and pricing fraud since they are unable to properly comprehend the nuances of services. In a study of 500 customers in Nairobi, Kenya, it was discovered that 35% of those linked to a certain bill pay service believed the service was free, despite audits of their accounts revealing a fee deduction each time they used it.

4. Online accounts with personal information - Users may be victimized by internal fraudsters who get access to accounts and utilize private information for dishonest purposes or external fraudsters who use social engineering scams like fake promotions to extort money or personal information from unwary customers. Clients may also be the victims of agent fraud, such as the charge of unauthorized fees, forcing customers to divide transactions, or gaining access to confidential customer information. 

This may be a case when you are involved in online gambling or trading. If you are familiar with these industries, you will definitely know that in most cases, you provide online websites with sensitive personal information such as an ID, driver’s license, and most importantly payment methods. That’s why customers of these services are always advised to only get involved with licensed companies, so if something inconvenient happens (e.g your money gets stolen), there will be a financial regulatory body that will take all the necessary steps to protect you as its client. For instance, according to a reputable licensed gambling company 9winz, other brands with similar legal stature are committed to protecting your personal information, making sure that you will never have to experience negative effects caused by high-risk transactions. 

1. Inadequate privacy protection  - Data management procedures are frequently poorly disclosed, with facts available only in a place to which few consumers have access and written in the difficult-to-understand language. Furthermore, most customers are unable to analyze the current and future risks of agreeing to data-related terms and conditions by clicking the "yes" box. Data that has been stolen or compromised could be used for identity theft or criminal purposes, or it could affect a customer's credit profile. 

Preventing online frauds

To lessen the risk of fraud and chargebacks, you can follow some simple steps as advised by many payment providers as well as the FTC: 

• If you have any doubts about a specific order, reject it.

• Use your gateway's built-in fraud tools, such as country code blocking, IP Whitelisting, Blacklisting, and Velocity checks, whenever possible. These are simple and inexpensive tools for verifying a cardholder's identity while making a purchase.

• At the time of processing, make sure the CVV - Card Verification Value (3 numbers on the back of the card) is turned on and checked. It does not guarantee that the cardholder is conducting the transaction, but it does ensure that the card is in the possession of the person making the transaction.

• If there are several transactions charged to one card in a short period of time or if a refusal code displays on your screen, request an alternative form of payment, such as a bank account transfer.

Thankfully, the majority of digital financial service providers nowadays are paying greater attention to these concerns and are beginning to incorporate answers into their business models. However, it does not mean that customers should not be careful with choosing the right companies in order to make transactions.