AVOIDING CREDIT CARD FRAUDS

It is a necessity for all merchants to avoid frauds that happen due to the usage of credit cards. A business gets affected to a great extent due to fraudulent orders. Smaller dealers who sell big-ticket items will be greatly affected by just a small amount of fraudulent orders. They could be affected to such an extent that it could also lead to their wipe-out.

With fraudulent orders come chargebacks. Chargebacks occur when cardholders dispute a purchase made by a credit card. When a chargeback occurs, the banks which issue credit cards initiate chargebacks against dealers. The sale frauds are deducted by the banks from the merchant accounts. In such cases, the dealers may not even be notified which leads to the chargeback dispute. Hence, a merchant has to remember that the bank which issues credit cards to the consumers is the initiator of chargebacks.

The vital part in credit card acceptance is to try and verify the cardholders. In online transactions, this can be done using the Address Verification System (AVS). This service makes an attempt to match the address on the credit-card statement of the cardholder to that of the provided billing address. If a match occurs, then the merchants can go ahead with the placed orders. If there is no match, then it is best to reject such orders.

It is a good idea to avoid orders from certain hotspot countries. Most of the fraudulent orders come from such countries. Another important point to be considered while accepting orders is to be very careful while accepting orders placed from a free e-mail address. Avoiding orders placed from free e-mail address may result is loss of orders. Though this holds true, a merchant must remember that it is impossible to trace consumers using free e-mail accounts. Also, the business lost will be lesser when compared to the chargebacks incurred. Hence, taking this risk will be worth it.

In the case of chargebacks, the merchant not only loses the price of purchase and actual inventory, he also faces a chargeback fee for assessing the merchant. A merchant with excessive chargeback could also end up losing his/her merchant account. This means that the merchant will be terminated without a warning and the merchant’s name will be included in a “Terminated Merchant File”. This file will be looked-up by the merchant account providers before a merchant account is granted. If a merchant’s name is found in this list, the providers may not issue another account for many years.

It is always better to deliver order through a carries which will require a signature on delivery. Also, these copies must be kept by the merchants for records. If a case if filed, the merchant will have some proof for his defence. Also, time must be spared to post warning messages on order pages. With this, the fraudulent orders could be avoided to a great extent. Keeping an open eye on transactions, making good judgements and usage of common sense will go a long way in avoiding credit card frauds.