• 
• 1.866.613.2558

Tips to Reduce Credit Card Fraud

Accepting credit cards is essential to any ecommerce business selling their product over the web. The ecommerce business must always be concerned about fraud. Fraud can occur in many different way often when you least expect and let your guard down. Merchants processing payments online must not only concern themselves with the credit card processing fees associated with accepting credit cards, but the cost that credit card fraud may have on their business. When credit card fraud occurs it usually cost the business owner the merchandise they have already shipped and they get a chargeback from their merchant service providers. Simply put, the credit card processing company takes the money out of the businesses account.

6 ways to reduce credit card fraud

1. Always use an AVS or address verification service. One of the best ways to minimize or eliminate online credit card fraud is by utilizing an Address verification service. This means that when a customer enters in the card information when making a purchase the system prompts them to enter their address and zip code. The AVS service does a match search and will instantly decide if the address information matches the credit card. Studies show that over 75% of the fraud committed involving e-commerce merchants involves an address mismatch. When a merchant uses an AVS service and get a mismatch they can simply void out the transaction.

2. Only ship product to the billing address. Many businesses donÕt even consider the risk of sending merchandise to a different address than that on the card. By always shipping the product to the address on the card the merchant reduces the risk of fraud. However, this is not always possible because many customers like to order gifts online and ship to the recipients.

3. Use the code on the back of the card. When accepting credit cards online merchants should always take the 3 digit code on the back of the card. This should always match the card and can provide another layer of fraud protection. If the numbers do not match the address on the card the merchant should void the transaction.

4. Take extra steps with unusually large orders. Be cautious when orders are 3-4 times the average size and the customer wants everything in a hurry. Most thieves committing credit card fraud tend to purchase large amounts of merchandise and need it quickly. Use extra caution.

5. Take precaution with customers that only give a ÒfreeÓ email like yahoo or gmail. Try and get a work email from them. Most thieves use free emails because they are untraceable.

6. Have the customer fax you the front and back of the card. This is extreme but if the caution flag goes up it might be necessary.

Most of these fraud prevention techniques can be used by applying common sense and at little cost. Merchants can also use a variety of ecommerce gateway solutions such as Authorize.net. These gateways provide built in fraud prevention tools including AVS and Card code verification. You can set the software up to screen for fraud then manually review the orders.

Merchant Guide