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MANUAL WAYS OF REDUCING FRAUD
TRANSACTIONS AND CHARGEBACKS
99.9% of chargeback’s occur due to
credit card fraud. Chargeback’s can hurt
your business to the extent of making it
bankrupt. Therefore, reducing fraud,
resulting in reduction in chargeback’s
should be given high significance.
Reducing fraud credit card transactions
is not an easy job for the ecommerce
merchant. There are several automatic
methods to check fraudulent
transactions; however this will not
guarantee 100% protection because the
fraudsters will find new ways to get
past the automatic security cover. The
highly advanced anti-fraud systems are
extremely expensive and complex to
implement.
One of the most effective methods to
prevent fraud is: to manually check and
confirm the credit card details given by
the customer.
The 5 simple steps to achieve complete
protection against fraud are given
below.
Gathering Information
This is the toughest part of the
process. A stolen credit card number is
enough to dupe e-commerce merchants.
Therefore, these numbers should be kept
very safely to prevent fraud. Inform
your customer’s about the dangers of
giving their credit card numbers to
other people.
Recognising Information
This part will not affect the online
merchant. The success of the fraudster
depends on the details that he
possesses.
Testing Credit Card
This involves the process of “test” or
“bogus” order. The fraudster will first
engage in a small sized online
transaction to check if it works. To
prevent this, the online merchants must
be very attentive to the credit card
numbers which are used to make purchases
of goods that are less than $5. These
payments must be highlighted and the
online merchant should call the credit
card holder and verify the order. This
will also help the cardholder to block
his stolen credit card. If transactions
are interrupted or cancelled, then the
online merchant should track it. If a
customer cancels an order and places a
more costly order, then the online
merchant should thoroughly investigate
the order.
The So called Drop
This is the shipping address where the
fraudster will receive his goods. This
will always be different from the
address mentioned in the cardholder’s
actual accounts. If the online merchant
finds out that the address of the
cardholder according to the records and
the shipping address are not the same
then, the transaction is most likely a
fraudulent one.
However, in case of services this
advantage is not there for the merchant.
However, the merchants can ask for the
address details and compare them.
Making a Transaction
This is the last step in the
transaction. Fraudsters, mostly, choose
the most expensive shipping method
because it is the fastest one. This
should ring some bells for the merchant
and he should contact the cardholder for
confirmation. Also, order values of over
$500 must be verified immediately. Also,
the time of placing the order should be
monitored and verified if found
suspicious.
The bottom line is: verify the online
orders by calling the cardholders.
Online merchants will think this is
waste of resources, but if there is a
fraudulent transaction and the customer
applies for a chargeback then it is you
who will suffer the most. |
