Fighting Credit Card Payment Fraud
Payment fraud is a more significant issue for online merchants than for bricks-and-mortar businesses for, unlike a face-to-face sale, an online transaction does not require a signature or credit-card imprint. “It’s a damnable problem for Web merchants,” said David Robertson, publisher of The Nilson Report. The trade publication figures the rate of credit-card fraud to be 18 cents to 24 cents per $100 of e-commerce sales — three to four times higher than the overall rate of payment fraud. As an online business, you can take several steps to reduce the amount of payment fraud.
- Only ship orders to the billing address.
- Don’t accept international orders. Since address verification is not available for international credit cards, you can’t verify if the shipping and billing address are the same.
- Require signature for all orders, and post it clearly during the check out process.
- Require CVV (Card Verification Value) number. The CVV number is a 3- or 4-digit number printed on the front (AMEX) of the card or signature strip (VISA, MasterCard).
- Use real time credit card verification processing service
- Check the IP address of the buyer. If the IP address is outside of the USA, reject the order.
- Do not ship to PO Box addresses
- For unusually large orders, call the customer to confirm the order. Make sure you can reach the customer. Leave a message if you have to, but talk to a live person prior to shipping the order.
- Do not accept e-mail addresses from free e-mail providers such as hotmail, yahoo, etc.