Credit Card Fraud and Your Business (Part 3 of 3)

In the previous posts in this series we discussed common types of credit card fraud and what to do if your business’s credit has been targeted. Now we will talk about protecting your e-commerce business from credit card fraud.

Online shopping has created an environment that can be easily exploited by criminals. Since the physical card does not need to be present at the time of purchase, these transactions are more vulnerable to fraud. This is because criminals do not need to pass all the physical security features on credit cards and can use stolen account information more easily.

How to protect your ecommerce site:

1. Participate in a verification program. Use Visa’s Verified by Visa program, MasterCard’s SecureCode or one of the other programs offered by major credit card companies. These programs decrease the risk ecommerce businesses take when processing credit cards online. They also increase your customer’s confidence in the safety of your online business when processing sensitive data.

2. Ask for the card security code. This code is located on the back of every credit card. Ask for it with every transaction.

3. Use AVS (address verification services). The service is offered by most credit card providers.

4. Ensure that your merchant account provider is PCI compliant.

5. Never send unencrypted data over the internet, use Secure Socket Layer (SSL) encryption.

Types of transactions to be wary of:

1. First Time Shoppers. Criminals are constantly finding new victims. These victims are not likely to be your existing customers.

2. Multiple orders from different cards from a single IP address. Multiple cards being used from the same IP address can often be a criminal using stolen account information to purchase goods.

3. Orders shipped to the same address but with multiple credit card account numbers. It is unlikely that the same household will make multiple purchases from the same merchant with many different credit card numbers.

4. Many orders from one credit card account in a short period of time. This may be a criminal trying to maximize the credit limit of the account before it is reported as lost or stolen.

5. Transactions where the shipping address and billing address are in different countries. This could be a criminal shipping goods to themselves while using stolen card information from another country.

6. Unusually large orders. Unrealistically big orders are made by criminals in order to steal the maximum value possible before the credit card is cancelled.

If you put security measures in place and monitor transactions, your ecommerece business can reduce the risk of credit card fraud.