Fraud Information: How Online Merchants Can Prevent Credit Card Fraud

Credit card fraud costs customers and merchants billions each year, but it can be prevented by implementing a few simple measures.

Since thieves feel they are less likely to be caught on the internet, online businesses are more susceptible to credit card fraud. Following this guide will help you to reduce credit card chargebacks that occur because of fraud.

1) Shipping address

It is nice for your customers if you can ship to a 'gift address' as some places call it. However, thieves use this feature with stolen credit cards. Even though it might reduce sales, it is best to ship only to the billing address for the credit card.

Some places that you sign up with online to charge your customers' credit cards will use the AVS (address verification system) to make sure that the address the customer gave is in fact the billing address for the credit card. If you use one of these online credit card processors, they may not protect you under their chargeback policy if you ship somewhere other than the billing address or do not get a delivery confirmation.



Some of those online credit card processing places cannot verify international addresses. If you are concerned about chargebacks, having a 'we will ship only within the United States' policy may be a good idea.

Not too long ago, it used to be that many people, especially those living in a county, did not have a street address. Today, only a small margin of people do not have a street address because street addresses had to be issued in order to make the 911 service efficient. Since this is the case, you can safely have a policy of only shipping to a street address without offending too many people.

2) Splitting up payment between cards

One sign that a customer is using a stolen credit card is that they want you to charge part of the order to one card with the remaining balance being charged to another. Part of why this is done is because smaller purchases may be over-looked by the owners of the cards.

3) Order Verification

Some online stores have made it part of their ordering process to call customers before shipping out their orders. This is a good policy because someone using a stolen credit card may not want to talk to the place that they are ordering from. If you have this policy, you don't necessarily have to call every customer. Having the note on your website that you will call to verify an order may be enough to scare off a would be thief.

4) Order Size

If you aren't going to call every customer to verify an order, you may want to consider doing it for the ones of a high-dollar amount. Even if the name and address are correct, a huge order could be a sign that something is amiss. It could have been a quantity mistake or a child ordering without permission.

If a customer has never bought from your online store before, they probably won't spend over about two hundred dollars. It is also notable that an order for a large quantity of the same thing is suspicious. More than likely, a person who orders a large quantity of the same item is someone who doesn't care how much they spend because they aren't using their own money.

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