Identifying eCommerce Fraud

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Craig Smith  |  Founder & CEO

4 simple steps to reduce your chances of eCommerce fraud and secure your business.

Most credit card fraud occurs during the holiday season, what requires a lots of checking like police and military checking. Customers are placing large orders on their credit cards, often at stores they infrequently visit. This makes it the best time for thieves to try and steal their information. The volume of transactions makes their theft easier, but it also helps to conceal fraudulent purchases.

Once they’ve copied a victims credit card, thieves will usually make multiple purchases online, since this makes it easier to conceal their identity. Once the fraud is discovered, however, the merchandise is on it’s way leaving the retailer to deal with the charge back and the thieves to enjoy their new toys.

Unfortunately, identifying fraud isn’t a perfect science, but here are a few tips you can implement to make it harder for stolen credit cards to be used on your website.

1. Use A Fraud Protection Service

These services can be expensive, but if you run an eCommerce site that processes thousands of orders a month, having a fraud protection services can be an incredible value. Check with your credit card processing service to see what they offer, as you might qualify for a discount by having both services run through the same company.

2. Use A CVV/AVS Verification System

Most credit card numbers are collected using either advanced skimmers or by opportunistic cashiers copying down the numbers before handing the card back. This means that many thieves won’t have the CVV value from the back of the card, and most won’t have the address that the card is registered to.

Asking for this information, particularly with new users or those placing large orders, is a quick way to reduce the number of fraudulent charges. While it might be a minor annoyance for some customers, most will understand the added security benefit.

3. Require Extra Verification For Rush Orders

If you have a new customer register for your site, place a large order and then order the fastest shipping possible, you should take extra steps to verify the address. It’s also a good idea to check the IP address of these orders against the billing and shipping addresses.

Legitimate shoppers around the holidays can be in a rush to order last minute gifts, but if they’re ordering something in California with a card registered in Michigan, you should have a system that flags the order for closer review.

4. Be Wary Of International Orders

If your website receives an order from someone in another country for high value items with a card registered here in the states, it should be flagged for immediate review. eCommerce sites that deal with international orders frequently will usually have fraud verification in place, but if your page rarely receives international traffic, it’s a good idea to verify the IP address of any order that originates from an international address.

Identifying fraud isn’t easy, and it often requires a few complicated steps on the part of your web development team, but each fraudulent order you capture is a charge back you won’t have to deal with.

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