How to Protect Your Online Business from Fraud
by Veronica Stone on October 16th, 2007
Order fraud is one of the most common types of online business fraud that there is. Whether someone is using a stolen credit card or information from stolen checks, etc, there is a chance that you could end up paying for it. When a company accepts payments with credit cards without the magswipe, there is a risk. Of course, since you do business online, it’s impossible to ask the customer to swipe his or her credit card. There can be fraudulent orders coming through right this second.
If there is no swipe of the card, it’s very easy for someone to order something and then say they did not get it. By using their credit card company’s chargeback feature, many of these dishonest customers get away with it too. There are a few things you can do to make sure this is not happening in your business. First of all, watch for warning signs, or have your staff watch for warning signs. Some of these might include:
* Orders that are larger than normal. If you notice an abnormally large order, be suspicious. While most of the time, it will be normal orders and not fraudulent ones, it’s better to be safe than sorry.
* Orders containing several units of the same type. This is one of the most common credit card fraud scams there is. Make sure to check for these types of orders, and if you have a staff to do this sort of thing for you, make sure that they are aware that you are watching for this sort of thing.
* Orders shipped overnight. Now, many people have their items shipped overnight, and most of them are decent and honest people. However, people who use fraudulent means of payment almost always have items shipped overnight. This means that you are out the cost of the items, plus the cost of an expensive shipping means.
* Orders shipped to an address other than the billing address. This is almost always the case with fraudulent orders. How are they going to get the things that they are stealing if they send it to the real cardholder’s address? Red flag orders like this.
* Multiple card numbers from one IP address. These types of orders need to be red flagged immediately as well. Normally, an honest person only uses one credit card to make orders, sometimes two. If you are seeing three, four or five different credit card numbers from the same IP address, you need to check that out right away.
The first thing you should do if you suspect fraud is to call the customer at the billing phone number. Call the merchant services and ask for the card holder’s phone number, or at least ask to match the one you have with the one in their files. At the very least, if the card company won’t give you the correct phone number (which they should), you can have them call the customer to verify the recent charge.
There are even a few preventative measures you can take before the order is placed. First of all, take the time to get your website secured so all credit card and customer information is encrypted and sent over secure channels. Secondly, you can require that the customer enter their birth date or other piece of information that the credit card company can verify against the card holder’s information. You may even require that customers register or sign in to place an order. If a new account is created with credit card information that is already in your system for a different customer account, you’ll be able to tell right away that something is amiss
By working with merchant services and implementing some simple and effective measures to secure your site and orders, you can save yourself a lot of money and a lot of headaches.
