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Payments fraud doesn't begin and end with stolen credit cards. There are sophisticated international networks of criminals who dedicate their entire lives to scheming and scamming merchants and consumers for every cent that they can extract. But there are also experts in the payments fraud field who are actively fighting back. True Fraud features real-life stories of the battles that are raging across the world, one transaction at a time.
Hey, I'm Pablo Torres, and this is True Fraud. This special episode is part of our latest mini series, diving into the fraud patterns in different countries that are important to you as a global ecommerce business. Make sure to subscribe so you don't miss the next country deep dive. Brazil has been always a very interesting country in regards to ecommerce, in regards to fraud, politically, even its geographical position in Latin America. It's it's a huge country.
Pablo Torres:There's a lot of, challenges for it. You know, when you think about logistics, for example, is is definitely something that kind of gets in the way for for the country. And, you know, speaking of of the political aspect of the country, there's been so much turmoil. Actually, I think it was a few years ago, a couple years ago, their president was put in jail for for, fraudulent activity and taking money from other people and whatnot. When you think about that alone, it gives you a really good view of what's happening in the country.
Pablo Torres:Brazil is being one of the biggest countries in Latin America is, of course, one of the biggest markets for e commerce right now. And the people are always looking in in to fashion. They're always looking into what's happening in in North America, what's happening in Europe. There's a lot of people that came from, you know, refugees from from different wars, different conflicts. So you have kind of a mix of multiple people, right, multiple races.
Pablo Torres:And so that that really changes the way that, commerce happens in the country. You know, a few years ago, actually, I wrote an article about how, you know, the the new thing was to to have a beard. And, you know, there were there was a kind of like, a spike in fraudulent activity for products that would help grow facial hair. And, you know, even even though that was a few years ago, that trend's still happening. And and it's still, you know, it's still there.
Pablo Torres:It's it's quite present. When you think about the the the the activity that happens in in that country, you know, we're we're talking again about informal commerce. All of those street markets you know when whenever you travel to Latin America and you think of, you know, if you've ever been to Brazil, there's like the Sunday market and, you know, you go to a specific part of the town and then they go and set up there. And you see somebody that's selling, you know, hair growth products. And where do you think they got that stuff?
Pablo Torres:You know? Yes. Those are legitimate businesses, but the way that they got them, maybe they didn't commit the fraud, but maybe they bought them from somebody that committed the fraud. E commerce there, when you're going there as a as a merchant, knowing what you're dealing with with, different payment methods is is super important. You know, the credit card, interest rate there is ridiculous.
Pablo Torres:Anyone that knows what they're talking about, regarding Latin America is gonna suggest you're gonna go to Brazil. Okay. For sure. Offer credit cards. But do you know what other payment methods exist in the country?
Pablo Torres:You know, Bolero is one of the lowest, risk payment methods that you can offer that that will have a better return for your for your business. Less risk on the fraud side. And and, you know, you don't have to to deal with a lot of the the exchange rates or, you know, whatever fees go on top of, whatever the banks are are adding to your your transaction. There's still a lot of credit card activity in the country, but people have learned to kind of pay it off at the end of the month before they they start paying for interest because the interest rates there are, ridiculous. You have to think about, you know, the density of the population in some of these cities.
Pablo Torres:You know, Rio de Janeiro is a massive, massive city. And so there's going to be, you know, the people that have their jobs, but there's also there's going to be a lot of criminal activity because the economy doesn't support everyone that lives in these massive, metropolis. Right? And so when you when you think about that then you have to think about okay so there's there's a lot of people that are using Boletto. There's also a lot of people that are using credit cards and then where do they use those credit cards?
Pablo Torres:So a lot of that credit card usage is online, but it's also in regular, places. A lot of the the the credit cards that are being used online for fraud, either they're coming from skimming credit cards that are being used in local places or either from sites or companies that have been compromised. And so in Brazil, you're really not going to see a lot of cross border credit card activity, like meaning you're not going to see credit cards from Russia being used in in the fraudulent activity from this country. Why? It's because there's there's a bigger culture.
Pablo Torres:There's there's a bigger pool of knowledge in regards to to fraud that has taught these people that if you're in Brazil and you're using a credit card from Spain, you're likely gonna get rejected. Perspective or the, I guess, the approach of of these groups that that commit this this sort of activity is defined by the knowledge that they have gathered in the last, you know, 20 years. Passing the knowledge to the next generation of of people that are going to be committing this this type of activity. It's it's very unlikely that you're going to see one person trying to do it, you know, whereas in other countries, it is more likely that you're going to find 1 or 2 people trying to, you know, buy stuff online. These are groups, and they, you know, they have been doing this for a while.
Pablo Torres:There was an article actually that I wrote a few years ago regarding the the school of fraud, and it it truly is kind of like that, you know. The the people that are committing this this sort of activity are people that are that have gathered the knowledge from their cousin or their friend and, you know, they got into it because they lost their job or, you know, for whatever reason they they're trying to make ends meet and and it it really, kind of perpetuates that sort of knowledge. When when you're thinking, you know, just kind of like jumping to to give a little bit of a different perspective, when you're thinking of European type of fraud, then, you know, you could be in London and you could be seeing credit cards from Spain, from Portugal, from, I mean, from Norway, whatever. Right? Because there's such a mix of people.
Pablo Torres:But when you're in Brazil, you don't really see a lot of people from all over the place living in Brazil. You see Brazilians living in Brazil. And it's something that that got stuck in my head, you know, during one of my visits, for example, to to Mexico, where one of my friends was saying, you know what? Mexico, it's really kind of for Mexicans. You don't see a lot of tourists from everywhere else when you get out of those kind of resort areas, which is very interesting.
Pablo Torres:Right? When you're kind of inside of of that picture, you don't really see it. And then once you get a different perspective, then it's it kind of gives you a a bit of a different view. Knowing about all this knowledge and all of the the this school that I'm talking about gives you an idea of the type of fraud that that these people are trying to commit, and it's it's a little bit more organized. Right?
Pablo Torres:There's larger groups, so there's likely somebody that's a little bit more tech savvy. And so there's there's a little bit more access to to technology as well. People are more inclined to be using technology. So when when you look at the the type of fraud that you see in Brazil, it's a little bit more on the technical side. And so if you're a merchant that's trying to to enter the Brazilian market, you need to be collecting a certain type of data.
Pablo Torres:Right? If you're going into into a market that where there's that's high risk to start with, Collecting a device fingerprint is kind of like your basic, thing that you should do. Right? Because when you have that, then you're looking at, you know, what kind of computer they're using, what kind of systems are they using, are they more inclined to to use iPads, for example. And so when you start identifying all of these different, criteria, then the controls that you have in place are gonna be a lot more effective.
Pablo Torres:So when you're a business and you're trying to keep up with marketing and sales and, you know, logistics and your warehouse and your operational, you know, everything, how are you supposed to keep up with all of this stuff? You know? There's there's when when you look at it from a I'll put it in a different perspective. There is one guy in your company that is trying to stop fraud, and there's 20,000 people that are trying to get through one person. Even if you have controls, even if you have, you know, some sort of fraud engine, stuff is gonna get through.
Pablo Torres:Now if you're, you know, as a as a merchant that's trying to access these markets, then how much money are you willing to lose? Just because you don't wanna pay a few cents for, you know, this pool of knowledge.
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