How to Stop Credit Card Fraud

Jun 16 07:03 2007 Mike Knudtson Print This Article

Learn what steps to take to protect your business from credit card fraud !

Online credit card fraud is happening more and more.

The chances of your online business being exposed to credit card fraud is very high and using the following will greatly reduce credit card fraud:

Cramming Protection - Prevent the use of credit card or ACH number generating schemes by limiting the number of transactions allowed from a given IP address.

Domain Blocking - Filter transactions by the Internet domain associated with the customer's email address.

Country Blocking - Filter transactions by the Internet domain associated with the customer's country code.

Prevent Duplicate Transactions - Track recent transactions to ensure the same transaction is not authorized more than once. This eliminates problems due to "double clicking" the transaction submit button as well as duplicate submittal of batch transactions.

IP Activity Limit - Limit the number of accepted transactions from a given IP address.

Large Transaction Notification - This feature examines the transaction amount after the transaction has been accepted. When the amount exceeds an amount specified by the merchant an e-mail is sent notifying the merchant that the amount has exceeded the threshold. The merchant can then review the transaction,Guest Posting refuse the sale before any products are shipped, and credit back the consumer at a later time.

Address Verification (AVS) - AVS matches the known address information associated with the given credit card number against the billing address information provided by the user. If the information does not match, the transaction is declined. The merchant has the option of choosing the level of match required for an approved transaction.

CVV2 - CVV2, or Card Verification Value 2, is a number that is printed, not imprinted, on Visa and Mastercard. This number is never transferred during card swipes and should only be known by the cardholder, the person holding the card in their hand.

With so many different types of credit card fraud, it is important to have a strategy to address each one. This article offers an insight into prevention methods for well known techniques of committing credit card fraud.

Card Not Present Fraud

CNP fraud is among the fastest rising category of fraud. The main reason for this is that it is becoming much harder to commit fraud in person, especially with the introduction of Chip and Pin. As online credit card fraud increases there are some measures that all merchants can take to ensure their associated costs of being exposed to online credit card fraud can be reduced.

Ï Call back customers to confirm orders. Although this is also a cost center, it could be used as a technique when the transaction appears somewhat out with the ordinary

Ï Pay attention to transactions where the delivery address and cardholder address are different

Ï AVS or CSC verification doesn't remove risks 100% but it removes the ability for fraud to be done base solely on acquiring account details with out having the credit card in person.

Card Present Fraud

Card Present Fraud has become increasingly hard to commit, and as a result it is no longer associated with being a white collar crime as is often the case with CNP fraud. Despite this, face to face or swiped card fraud can still be an issue which retail merchants still have to deal with. Following certain protocols can help to limit the chances of you being affected, and ensure that your business is refunded by following the correct procedures.

Ï Train employees to be on the look out for people who appear nervous or uncomfortable. They should not confront then based on that alone, but they should certainly be discreetly vigilant when they do.

Ï Check that the card number that is embossed matches the card number on the receipt. Pay particular attention to the last 4 digits if this has to be done discreetly and promptly. If they are different then it is important to act. In situations like this it is likely that skimming has taken place.

Finally, large orders from overseas countries with US Billing address are almost always fraud so it's better to have these customers pay via western union or bank wire. Many times fraudsters will order a large order using a stolen credit card and by the time you've discovered the card is stolen you already shiped the order.

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About Article Author

Mike Knudtson
Mike Knudtson

Mike Knudtson is the co-founder of the Payment Gateway and the founder of merchant account provider Electronic Transfer, Inc.. He has helped thousands of merchants set up retail and ecommerce payment processing for their business. Electronic Transfer, Inc. is one of the leading merchant account companies serving merchants since 1989.

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