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Avoiding credit card fraud
through fraud detection and fraud prevention is
essential in order to minimize risk and maximize
profits.
Furthermore, new and advanced fraud prevention
tools provided by payment gateway service
providers such as Authorized.net for example are
making it much more difficult for crooks to use
stolen credit cards online.
Fraudulent prevention tools can help:
-Reduce cost by minimizing and preventing
authorization and chargeback fees as well as
possible inventory loss resulting from
fraudulent transactions. |
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| -Protect profits by maximizing real, legitimate
transactions, rather than refusing those orders
due to fear of potential fraud. |
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-Maximize flexibility by customizing filter
settings according to your unique business
needs.
-Restrict transaction activity from specific
Internet Protocol (IP) addresses using IP tools.
Address Verification Service
Most, if not all payment gateway systems provide
anti-fraud features called Address Verification
Service (AVS).
AVS is an advanced fraud protection tool
designed by bankcard processors to help spot
potential fraudulent transactions before they
take place.
AVS works by comparing the billing address and
zip code provided by the ordering customer with
the actual address and zip code that is on file
with the card issuing bank. And if the address
which the customer entered online does not match
the actual address that is on file with the
credit card bank then the transaction will be
declined automatically by the AVS system.
AVS, Address Verification Service, also known as
filters, can be customized to control how
suspicious transactions are handled. And with
such verification tools you’re given the option
to approve or decline specific types of
transactions or even place them on hold for
further review and verification.
Fraudulent detection filters
There are many types of fraudulent filter tools
which work together to evaluate transactions for
indications of fraud. And their combined
technology provides a highly effective defense
system against fraudulent transactions.
Amount Filter sets lower and
upper transaction amount thresholds to restrict
high-risk transactions often used to test the
validity of credit card numbers.
Hourly Velocity Filter limits
the total number of transactions received per
hour, preventing high-volume attacks common with
fraudulent transactions.
Shipping-Billing Mismatch Filter
identifies high-risk transactions with different
shipping and billing addresses, potentially
indicating purchases made using a stolen credit
card.
Transaction IP Velocity Filter
isolates suspicious activity from a single
source by identifying excessive transactions
received from the same IP address.
Suspicious Transaction Filter
(an Authorize.Net fraud protection filter)
reviews highly suspicious transactions using
proprietary criteria identified by
Authorize.Net's dedicated Fraud Management Team.
Authorized AIM IP Addresses
allows merchants submitting Advanced Integration
Method (AIM) transactions to designate specific
server IP addresses that are authorized to
submit transactions. |
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IP Address Blocking
blocks transactions from IP addresses known to
be used for fraudulent activity.
Enhanced AVS Handling Filter is
a standard feature of the payment gateway that
compares the address submitted with an order to
the address on file with the customer's credit
card issuer. Merchants can then choose to reject
or allow transactions based on the AVS response
codes. AFDS includes an AVS filter that assists
the decision process by allowing merchants the
additional options of flagging AVS transactions
for monitoring purposes, or holding them for
manual review.
Enhanced CCV Handling Filter is
a standard feature of the payment gateway as
well. CCV uses a card's three- or four-digit
number to validate customer information on file
with the credit card association. Like the AVS
Filter, the CCV Filter allows merchants the
additional options of flagging CCV transactions
for monitoring purposes, or holding them for
manual review.
Shipping Address Verification Filter
verifies that the shipping address received with
an order is a valid postal address.
IP Shipping Address Mismatch Filter
compares the shipping address provided with an
order to the IP address of where the order
originated from. This helps to determine whether
or not the order is shipping to the country from
which it originated.
Regional IP Address Filter
flags orders coming from specific regions or
countries. You can choose to customize the
filter actions based on an entire geographic
area, or select country by country how to
process transactions flagged by the filter.
With advanced tools such as fraud filters you
can protect your online business from fraudulent
credit card transactions. However, it is also
important to use good judgment as well. |
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Tips for avoiding
credit card fraud
Fraud filter tools can help internet businesses
avoid credit card fraud to a great extent, but
there are plenty of checks that you can do to
help prevent fraudulent transactions as well.
Furthermore, it’s important to realize that not
every transaction is fraudulent, even when
certain aspects of the transaction don’t match
or seem right such as in the case with a
difference in the bill-to and the ship-to
address.
For example, a customer may order a product
online using their home billing address but may
enter in a different address for the ship-to
address, such as their work place for example.
And many times, this may be the case.
The customer will not be home to sign for the
package and/or they may have to use the product
for work, and it’s more convenient for them to
have the product shipped to their work place
than to their home.
And sometimes the customer would rather have the
product delivered to their work place in order
to avoid the product being stolen from their
door step when no one is home to receive it,
which happens more often than not in bad
neighborhoods.
However, when in doubt, (for whatever the reason
may be) you can always call the customer for
further questioning and/or use Google to conduct
further research on the “ship-to” address in
order to make sure that the ship-to address is a
genuine business location.
Yet during the holiday seasons customers may
purchase items online and have the items shipped
to another home address instead of their own,
such as in the case of buying gifts for others.
But again, if the transaction is a purchase for
a high ticket item with a shipping address that
is different from the billing address then you
can always call the customer for further proof
and verification of the authenticity of the
transaction in order to prevent any possible
fraudulent activity.
There are other red flags to look for when
trying to prevent credit card fraud such as
phone numbers that are constantly busy or send
the call straight to voice mail or a fax
machine. All of these are possible indicators of
credit card fraud. |
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Credit card fraud
and international orders
It’s also important to use caution when
receiving and processing international orders
from customers online. If it’s a business
customer or a known, repeat business customer
with a genuine business location then there is a
smaller chance for fraud.
However, if you’re going to take and process
international orders then you may want to
implement strict policies before doing so. Or,
you can refuse to accept international orders
all together as well. That is entirely up to
you.
You can also limit international orders to near
by and/or safe countries as well. And safe
countries can include countries such as Canada,
United Kingdom, Ireland and Europe.
Furthermore, you can set your “IP Address
Blocking” filter to decline orders from unsafe,
high risk countries such as South America,
Central America, Africa, India and the Middle
East.
You can request that all International orders
over a certain dollar amount be paid by bank
wire transfers only in order to avoid
international credit card fraud.
You can also request that international
customers fax or email you a copy of their
credit card, (front and back) along with a copy
of their drivers’ license as well in order to
show that both signatures match.
The stricter your international order policy is
then the less likely you are to receive
fraudulent credit card orders. And if you are
going to take and process international orders
then be sure to have a section on your website
detailing your guidelines and procedures for
international orders. |
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Credit card fraud by
credit card owners
Some times, the credit card owners themselves
will commit fraud by purchasing a product online
and then after receiving the product and their
monthly credit card statement they will proceed
to contact their credit card bank and report
that specific transaction as an unauthorized
charge.
They will simply call the card issuing bank and
report the credit card as stolen or deny making
the purchase completely. And in such cases,
there’s not much that you can do other than to
dispute the charge by providing all details for
the transaction, shipping address, tracking
number etc. Yet many times dealers lose such
disputes and the customer ends up with the
product, for free.
The international bank will proceed with the
chargeback back causing your own merchant
account provider to take those funds from your
bank account and return them to the
international card holder. And in the end, the
business owner loses.
However, don’t let this trouble you. You can
still proceed to take international orders and
national orders as well yet all the while doing
so with extra caution using fraud protection
filters and good judgment as well. And in this
manner, you can avoid credit card fraud,
minimize risk, and succeed online. |
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<-Back - Main Page -
Next-> |
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How to Ship International and Overseas |
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How You Get Paid Each and Every Day |
| >
Dealing with Product Returns and Exchanges |
| >
Sample Return Policy and Procedures |
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