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Apple iPhone release day is a right royal pain in the arse for banks. The surge of one-off high value payments causes a huge spike in false positive fraud detec

Apple iPhone release day is a right royal pain in the arse for banks. The surge of one-off high value payments causes a huge spike in false positive fraud detections, which then swamps staff responsible for performing manual checks. And that’s after we’ve already tweaked rules to prepare for iPhone day On top of all the, the fraud systems at the major card networks also go haywire. They start seeing huge spikes in high value transactions, and start randomly declining transactions. On the banks side, we can see these transactions being declined by the network, but it’s damn near impossible to stop them. The card networks themselves set the rules, and getting hold of someone technical enough to turn them off is surprisingly hard to do. Suffice to say, iPhone day each year is a bit of an all-hands-on-deck situation for bank fraud teams. You’ve got your technical teams trying to tweak rules to better detect and ignore iPhone purchases, which it much harder than it should be because Apples payment processing system is a Byzantium nightmare that creates so many different types of transactions, and uses so many merchant identities you can just do a simple “if Apple, ignore” rule. Then you’ve got your reviewer teams working hard to rapidly the all the flags so customers are impacted for too long. It doesn’t help that buying MacBooks and iPhones is a classic way for people to commit credit card fraud and money laundering. The products hold their value so well, and are so easy to shift on the second hand market, that’s it’s a prime method for organised crime groups to liquidate and launder stolen funds.

izacus 3y ago
Poor guys, having to work to fix the fsck up they created themselves.
- avianlyric 3y ago
  At the end of the day, you end up paying for fraud. The article might say that business “absorb” the cost, but that’s bullshit. Business “absorb” the cost by increasing prices, and increasing fees. Given the fraud generally effect all businesses in the same market equally, there’s little incentive for businesses to reduce fraud, because it cost all of their competitors are having to absorb, so everyone just bakes the cost of fraud into their prices.
rkachowski 3y ago
Allowing me to buy things via my bank account is pretty much the use case for a bank account. I have very little sympathy for the self inflicted "byzantine" consequences that result from a single valid purchase.
- tremon 3y ago
  But they're mostly not self-inflicted: the cause of all these things is asinine banking regulations (under the guise of combating terrorism) that are enacted by governments all across the world.
  - avianlyric 3y ago
    Nope, there are very few banking regulations that exist to prevent terrorism, mostly because transactions associated with domestic terrorism look exactly like normal transactions, and are so few and far between that statically there’s basically zero chance you’re gonna correctly detect them. Any rules that are around detecting terrorism are mostly to do with sending money to sanctioned countries and individuals. Those rules are stupidly annoying to work with, because you’re basically force to write a rule that boils down to “does transaction description include the word ‘Iran’ then flag/block transaction”. As you can probably imagine they’re not very effective, but you look like a fucking idiot if your customer gets caught up in a terrorism investigation, and you didn’t flag/block those transactions. Most regulation deals with something far more mundane, money laundering. It’s mostly to prevent organised crime groups being able to launder their cash, that either cash generated from the “traditional” crimes, but more often it’s cash generated from socially engineering normal people into handing over bank details, or simply convincing them to send their life savings to a fraudster. Something that’s far more common than people expect, and far more effective than people expect.
- avianlyric 3y ago
  You don’t seem to understand, the Byzantine problems are caused by Apple. They don’t bother properly following the network rules and guidelines, as a consequence the data banks get about their transactions in order decide an approval or detect fraud is a complete and total mess. Makes detecting fraud vs legitimate transactions harder than it should be. Eh, I assume you also want your bank to block fraudulent transactions on your card. Somehow I doubt you would react kindly to someone buying half a dozen MacBooks on your card without your knowledge.
ThePowerOfFuet 3y ago
>On top of all the, the fraud systems at the major card networks also go haywire. They start seeing huge spikes in high value transactions, and start randomly declining transactions. On the banks side, we can see these transactions being declined by the network, but it’s damn near impossible to stop them. With 3DS2 why is this even a thing?
- avianlyric 3y ago
  Because Apple don’t use 3DS, also it impact things like in-store payments, and also Apple Pay setup. Cards are added to Apple Pay using a special set of payment network transaction messages, which to the networks systems just look like normal card transactions. Unfortunately the network fraud rules aren’t smart enough to differentiate between thousands of cards being added to Apple Pay, vs thousands of unexpected transactions that all appear to be coming from the same “merchant”.

izacus 3y ago

Poor guys, having to work to fix the fsck up they created themselves.

avianlyric 3y ago
At the end of the day, you end up paying for fraud. The article might say that business “absorb” the cost, but that’s bullshit. Business “absorb” the cost by increasing prices, and increasing fees. Given the fraud generally effect all businesses in the same market equally, there’s little incentive for businesses to reduce fraud, because it cost all of their competitors are having to absorb, so everyone just bakes the cost of fraud into their prices.

rkachowski 3y ago

Allowing me to buy things via my bank account is pretty much the use case for a bank account. I have very little sympathy for the self inflicted "byzantine" consequences that result from a single valid purchase.

tremon 3y ago
But they're mostly not self-inflicted: the cause of all these things is asinine banking regulations (under the guise of combating terrorism) that are enacted by governments all across the world.
- avianlyric 3y ago
  Nope, there are very few banking regulations that exist to prevent terrorism, mostly because transactions associated with domestic terrorism look exactly like normal transactions, and are so few and far between that statically there’s basically zero chance you’re gonna correctly detect them. Any rules that are around detecting terrorism are mostly to do with sending money to sanctioned countries and individuals. Those rules are stupidly annoying to work with, because you’re basically force to write a rule that boils down to “does transaction description include the word ‘Iran’ then flag/block transaction”. As you can probably imagine they’re not very effective, but you look like a fucking idiot if your customer gets caught up in a terrorism investigation, and you didn’t flag/block those transactions. Most regulation deals with something far more mundane, money laundering. It’s mostly to prevent organised crime groups being able to launder their cash, that either cash generated from the “traditional” crimes, but more often it’s cash generated from socially engineering normal people into handing over bank details, or simply convincing them to send their life savings to a fraudster. Something that’s far more common than people expect, and far more effective than people expect.
avianlyric 3y ago
You don’t seem to understand, the Byzantine problems are caused by Apple. They don’t bother properly following the network rules and guidelines, as a consequence the data banks get about their transactions in order decide an approval or detect fraud is a complete and total mess. Makes detecting fraud vs legitimate transactions harder than it should be. Eh, I assume you also want your bank to block fraudulent transactions on your card. Somehow I doubt you would react kindly to someone buying half a dozen MacBooks on your card without your knowledge.

ThePowerOfFuet 3y ago

>On top of all the, the fraud systems at the major card networks also go haywire. They start seeing huge spikes in high value transactions, and start randomly declining transactions. On the banks side, we can see these transactions being declined by the network, but it’s damn near impossible to stop them. With 3DS2 why is this even a thing?

avianlyric 3y ago
Because Apple don’t use 3DS, also it impact things like in-store payments, and also Apple Pay setup. Cards are added to Apple Pay using a special set of payment network transaction messages, which to the networks systems just look like normal card transactions. Unfortunately the network fraud rules aren’t smart enough to differentiate between thousands of cards being added to Apple Pay, vs thousands of unexpected transactions that all appear to be coming from the same “merchant”.