Eight Steps To Minimize Credit Card Fraud For Merchants

Here are some tips to minimize your risk of credit card fraud:

1) Begin taking a few extra steps to validate each purchase. Don't accept purchases unless complete information is provided (including full address and phone number). We also now recommend Address Verification for all of your credit card orders.

2) Be wary of purchases with different "bill to" and "ship to" addresses. We now recommend anyone who uses a different "ship to" address to send a fax with their signature and credit card number authorizing the transaction.

3) Be especially careful with purchases that come from free email services -- there is a much higher incidence of fraud from these services (hotmail.com, juno.com, usa.net, etc.). Many businesses won't even accept orders that come through these free email accounts anymore. That's because it's so easy for a scamster to open a free, anonymous email account in another person's name and then send you, the merchant, a purchase request using the fake email account and a fraudulent credit card number (just as in our example above).

Since there are so many free email services, how do you know if the purchase you receive is from one of these free email services? You can check a list of 700+ of these free email services. (http://www.antifraud.com/redflag.htm)

You can also find an excellent article published at this same site, (http://www.antifraud.com/) which provides a good (although not foolproof) suggestion for verifying email addresses: check every Email address by typing "www" in front of the domain name of the email address into your browser.

For example, if you got an purchase addressed from audri@scambusters.org and you typed www.scambusters.org, you'd get to the ScamBusters Web site, which is a legitimate Web site. Or, if you got an order from sallysmith@netcom.com, you'd type in www.netcom.com and you'd be at a legitimate ISP. On the other hand, the article suggests that if you got a purchase from joesmith@cyberdude.com and typed in www.cyberdude.com, you'd find yourself at a site which offers 150+ free email domains. (We're not saying cyberdudes, juno, hotmail, etc. are not legitimate. Rather, we're suggesting that orders that come from these free email services warrant additional care and attention.)

What precautions should you take with purchases from free email accounts? We recommend sending an email requesting additional information before you process the purchase. More specifically, ask for: a non-free mail address, the name and phone number of the bank that issued the credit card, the exact name on credit card, and the exact billing address. Often, you won't get a reply. If you do, you can easily verify the information (which you should take the time to do).

4) Be especially wary of purchases that are larger than your typical purchase amount, and purchases with immediate delivery. Crooks don't care what it costs, since they aren't planning on paying for it anyway.

5) Pay extra attention to international purchases. Do everything you can to validate the purchase before you buy the travel and email it to a different country.

6) If you're suspicious, pick up the phone and call the customer to confirm the purchase. Believe us, it will save you a lot of time, and money, in the long run.

7) Consider using software or services to fight credit card fraud online. We haven't tried any of these services. However, we have heard positive reviews from colleagues who have used Cybersource (http://www.cybersource.com/) and Clear Commerce Corp. (http://www.clearcommerce.com/)

8) If you (as a merchant) do have the misfortune of being scammed by a credit card thief, you should contact your merchant processor immediately and inform them of the situation. In our case, our merchant provider was able to give us the name and number of the cardholder's bank and we were then able to contact the cardholder and inform them that their card number had been stolen. (Many people aren't even aware that their account number has been stolen.) You should also want to contact your bank, and the authorities as well. (As we mentioned, the authorities will probably take a report, but may not do much else depending on the dollar amount of the fraud.)