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Preventing Ecommerce Fraud

By R.O.B On April 15, 2010 Under Making Money Online, Running Online Business

Perpetuating tight security and utilizing fraud prevention tools is imperative to maintaining a successful ecommerce business. This article details tips to help online merchants detect, deter, and prevent online transaction fraud.

Use the Address Verification Service (AVS) – The AVS is a security system that compares a customer’s provided billing address with the address on file with the credit card issuer. A payment will be accepted or declined based on the AVS response code received by your payment gateway.

Verify the Credit Card – All credit cards have a three- or four-digit security code that can be used to detect fraudulent orders. The code provided by the customer can be compared with the code on file with the credit card issuer, which provides an extra measure of security against unauthorized transactions.

Watch Out for Suspicious Orders – Pay particular attention to orders that seem abnormally large, have a different billing and shipping address, originate from high-risk countries, or seem unusual in any way.

Note Abnormal Customers – Similarly, pay close attention to customers that use an anonymous email address (although this alone is not indicative of fraud), do not provide a valid phone number, request quickest shipping possible regardless of cost, and do not pass fraud checks you have in place.

Avoid Shipping to High-Risk Countries – Certain countries are known as high-risk countries – or countries where an alarmingly high rate of fraud originates from. Avoid shipping to any countries or areas identified as high risk.

Pay Attention to Credit Card Numbers – Be wary if multiple orders are placed using the same credit card number or if a credit card number is one of several that is being used to ship orders to the same address.

Keep Detailed Contact Records – In case you need to dispute a chargeback or fraudulent transaction, always keep records of all contact you have with each customer.

Identify Fraud Patterns – Start to identify fraud patterns or behaviors or factors indicative of fraud and implement specific alerts or actions to take when a particular order fits the pattern.

Use Reputable Payment Services – Use payment services that offer a wide range of fraud prevention resources and tools to help you combat and prevent unauthorized transactions.