Online merchants can lose significant amounts of money to criminals who place fraudulent purchases. They use stolen credit cards and the merchant must refund the money to the bank. Unfortunately the merchandise has usually been shipped out already so the merchant absorbs the loss. This can be prevented by watching for the signs of a potentially fraudulent purchase and taking special steps to verify it. The extra effort will pay off in reduced losses.
Step 1
Post an anti-fraud notice on your website and order form that says you aggressively verify each order. This will help prevent criminals from placing orders on your site, according to Marketing Tips. They tend to look for easy targets and will shy away from sites where they know their orders are likely to be rejected.
Step 2
Require online purchasers to provide the three-digit verification code for Visa and MasterCard and the four-digit verification code for American Express cards. These codes are printed on the card according to Marketing Tips, so the buyer must have it in his possession in order to complete the transaction.
Step 3
Require online purchasers to enter the exact billing address that appears on the credit card statement. This is especially important when the person wants the merchandise shipping to another address or is trying to use a post office box.
Step 4
Ask for additional personal information, such as the purchaser's telephone number and email address. A generic address from a free provider like Yahoo!, Gmail or Hotmail can be a red flag because they are anonymous and easy to sign up for and discard. Verify the postal address and phone number for buyers who use free email accounts.
Step 5
Look for anything unusual about the order. Is it larger than the average order, or did the buyer seem to select random items? These can be red flags for fraud and call for further investigation.
Tips and Warnings
- Fraudulent buyers often ask for expedited shipping and say that cost is no object. This is because they want you to ship the order before the credit card is reported as stolen. They don't care how much it costs because the card does not belong to them and they will not be paying. Take extra steps to verify urgent orders as legitimate.
- Credit card fraud against merchants isn't limited to online orders. "Inc." magazine reports that scammers pretend to be hearing impaired and contact businesses through telephone relay services. They try to place large orders using stolen credit credits. They often ask the merchant to charge more than the purchase amount and wire the extra funds to a "shipper," who is really in on the scam and will keep the money.
Member Comments