|
How to Protect Your Business From Credit Card Fraud
The prevalence of credit card fraud has been well reported in the press. However, news stories tend to focus on the stress caused to the cardholder and forget the second victim in this crime - the business who the fraudulent transaction was made with. The anxiety caused to the merchant should not be underestimated, especially in the case of small businesses, as they are ultimately the ones who will lose their money. Therefore, if you are setting up an online business it is imperative that you know what measures you should be taking to prevent credit card fraud to both protect your customers and save financial losses to yourself.
When a cardholder finds a potentially fraudulent transaction on their statement their issuing bank will issue a retrieval request, which you must respond to within the allotted time to prevent a chargeback automatically being issued against you. For offline merchants, a copy of the imprinted receipt should be readily available. With the arrival of chip and pin, most unrecognised transactions turn out to have been queried in error as the new system makes it much trickier for fraudsters to commit their crime. An online merchant does not have this advantage, but there are ways you can lessen the risk of fraud in none face to face transactions.
|
|
Firstly, when a customer places an order you should ask for the cardholder's CVV2 (Visa) or CVC2 (Mastercard) number. These are the three digits number printed on the reverse of the credit card, on the signature panel. Only someone with the card in their possession will be able to provide this, so you will be able to prevent fraud in instances where someone has obtained a card number from carelessly discarded documentation.
Naturally, if the card has been stolen this measure will not assist fraud prevention so you cannot rely on this alone. Another step all responsible merchants should take is to use AVS (the Address Verication System). AVS can confirm whether the delivery address matches the billing address held on the issuing bank's records. There are many instances where a genuine cardholder may wish their order to be delivered to another address, but it may be prudent to insist that for their first order at least, delivery can only be made to the billing address. If their order proceeds without problems, this policy can be relaxed for further transactions.
This measure is impractical for some merchants, but there are 'red flags' you can look for which individually may not be cause for concern, but collectively can be an indication of fraud. For instance, if AVS reveals that the billing address is domestic but the delivery address is foreign proceed with caution. Also look for activity that could be deemed unusual, such as atypical bulk buys of items, or even if the order was placed at an 'odd' time of day. If an order seems unusual or you feel there is cause for suspicion do not be afraid to ask for further identification or insist that they provide you with a business email address rather than one set up with a free email provider, which offers no guarantee as to the person's identity.
While there is no fool proof way of online merchants preventing fraud at present, following the above guidelines can help on reducing the number of fraudulent transactions made through your company website.
|
|
|
|
|
