Threats to Internet users‘ safety have been overblown proportionately with the growth of this technology. Unluckily, for e-commerce merchants, a good chunk goes to them. The risk of fraud is certainly higher in card-not-present transactions such as online purchases compared to traditional selling where the card is actually verifiable with the customer’s signature. For online businessmen, every credit card purchase is simply of higher potential to turn invalid. However, the situation is not helpless and there are ways to detect whether or not a credit card used by an online buyer is genuine.
The first understandable step is to ensure that information provided by the customer is correct and complete, including full address and phone number. In other words, you reduce the chance that a purchase turns out to be illegal when you have additional information entered through your website matching what is contained in the card holder’s actual bank records.
Of course, it’s not enough to accept whatever information is given. You also need to verify, for example, by calling the phone numbers entered by the person on your client interface. If you just can’t reach those numbers, they’re probably fake and so is the customer who claims to be the legitimate owner of the account he plans to make a purchase with.
If you have an e-commerce merchant services account, the more you need to be conscious about preventing charge backs or having to pay the cost of invalid credit card purchases. Consequently, additional security measures might be essential for particularly doubtful transactions. Ask the customer to fax both sides of the card itself as well as any government ID such as a driver’s license. Or require him to supply you with the Card Security Code which is a set of numbers found only on the credit card itself. Because most credit card theft happens virtually (only information about the account is stolen and not the card itself), knowing that a customer actually has the card increases the likelihood that he is the rightful card holder.
Spotting invalid purchases can actually be easy and may just require common sense. For example, orders to be shipped to an address other than what is indicated in a card holder’s banking records could be illegal. Orders coming from free email services such as Yahoomail, Gmail, etc. are also a red flag considering the high frequency of deception using these services.
Larger-than-normal purchases, particularly when specified for rush shipment, could mean a thief grabbing the limited chance he has to drain his victim’s account, knowing it will soon be frozen once the theft is reported. Orders made outside the country should also be looked into more closely simply because you will have almost no way of verifying whether or not the supplied address is genuine.