Tips to Prevent Online Credit Card Fraud
July 13, 2006 – 3:33 pmWell if you’ve ever been a victim of fraud in any way, shape or form then you’ll know that it can just be a pain in the butt trying to figure out how to proceed. Depending on the amounts involved this in some cases can make you totally re-think accepting funds in certain ways.
I fell victim to Money Order fraud where a customer would send me a Western Union money order and it is my belief that as soon as they sent it they’d retract the amount of the money order and send me the order, I’d get it, put it in the bank and “sit on it”, got a memo from the bank stating the funds were deposited and then 30 days later receive a memo from my bank saying to the affect that the money order bounced. Needless to say I was not impressed, and I was only happy that it was for a small amount of money :). Now what does this have to do with Online Credit Card Fraud? Everything! Of course. If you can begin to understand how fraud works then you can develop measures to cut down the instances in which fraud occurs and is successful.
I started to think about after reading after reading a posting “CC Merchant and CC Fraud” on a forum I frequent from time to time. As online retailers you face a different world when it comes to payment, customers and how funds are transacted. Because of this there are different rules to play by and many sites out there claiming to be experts in helping to eliminate Credit Card Fraud. Here are some tips that I pulled from Scambusters.org which I think seem pertinent to preventing fraud online mixed with some i’ve come to realize over the years.
- Make sure that the customer’s information is complete: If the information is not complete then simply reject it. When I mean “Complete” I am taking about having phone numbers, full addresses… the works! I know its tempting when you are getting sales to deny them but remember you are saving yourself chargeback fees and trust me you don’t want those.
- Don’t accept orders made from an untraceable email address: If you accept orders from email addresses belonging to free, web-based or email-forwarded email addresses these can be next to impossible to trace and chances are you will not see that money ever again and you’ll be left owing. Addition to this is to checkout the domain name attached to the email address
Example:
Check “Commercecubes.com”
If the site appears to be valid then you are good to go
- Last ditch effort - Call the customer to confirm: Calling to confirm with the customer that the information that they’ve given is correct is a smart way to go if you are having trouble verifying their information. If you call the customer and they’ve never heard of this or didn’t make payment on this then its time to call the issuing bank of their credit card to report this to the fraud department.
- Different Billing and Shipping Address: When you’re processing orders from time to time you may notice that the Billing address differs from the shipping address and sometimes they are in different countries. Naturally this should raise a flag to check with the customer that the information they’ve provided is correct. An addition to this is to do an address search on various sites such as Yellowpages.com to verify that the person lives at that address. I’ve used this before and its worked like a charm.
- Tracing IP addresses: This is a little more advanced tip but still it’s a great idea in cutting down on the fraud you may experience. Two bits of code that to you use include HTTP_USER_AGENT and REMOTE_ADDR. This work in most form handlers and while the syntax varies depending on the form handler involved the principle is the same… You can trace IP addresses straight to the owner. From there if need be you can contact the ISP System Admin person and inform them of illegal activity on said IP address.
Hopefully these tips will save you some time, possible stress that could otherwise be avoided and also save you money in lost products, profits and charge backs.
Luc
Crusader against online fraud