An excellent report from preCharge Risk Management Solutions was released today ten points for minimising risk to merchants this Christmas.
Fraud transactions typically triple when it comes to Christmas time and its estimated that this year the fraud total will be in the region of $50 billion; of the online merchants covering will cover nearly 100% of the costs.
"While consumers have banks looking out for them, who's looking out for legitimate online retailers?" asks Howard Schecter, Regional Sales Manager for preCharge Risk Management Solutions.
Top Ten Fraud Prevention Tips for Online Retailers:
1) Address Verification Service (AVS) and Card Verification Value Code (CVV/CV2) matches alone will not protect merchants. Most banks do not honour a valid match as a merchant dispute for a chargeback, and a CVV/CV2 number is just as easy to steal as the billing address.
2) Collect the Internet Protocol (IP) address of your visitors. The IP address is invaluable for tracking fraud. ARIN (http://www.arin.net) can tell you the company that an IP address is registered to and the country itself.
3) If you can't verify an order and your instinct tells you not to accept it, then don't. While rejecting a valid order certainly isn't a good thing, a chargeback is worse.
4) Require an adult signature upon delivery, even if a customer requests otherwise.
5) UPS and FedEx offer change in shipping notifications free of charge. Fraudsters often ship packages to a legitimate address, getting AVS match and bank verification, only to re-route the package in transit. Notifications known as "exception reports" can be sent via email and are invaluable to stopping packages from ending up in a fraudster's hands.
6) When in doubt, require two credit cards for verification. A scammer with one stolen card is common, a scammer with two cards from the same cardholder is rare.
7) Search engines, such as Google and Yahoo, can aide in your screening process. Search for the customer name, phone number and IP addresses. Fraudsters can often be found online, referenced in forums and directories.
8) Most counties now have property records online. Try searching housing records to validate the customer's residency.
9) Include your policies and customer service information with every shipment and make your return policy easy to understand.
10) Confirm your merchant account descriptor (the name and phone number your customers see) is correct. A customer's inability to contact you can result in bad public relations and even chargebacks. Test a $1.00 charge to your personal credit card; never assume that the information is correct.
Excellent advice one more tip I would add to this is to back up all your log files so that you have evidence of any fraudulent transactions - 1) to have evidence where and when the transaction took place 2) once you have the evidence put produce in place reducing risk in the future.