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![*]()
Minimize risks involved with a Merchant Account
![*]() The advent of the Internet has made credit
card fraud easier to promulgate.
It is the merchant -and not the customer - who bears the
brunt of such fraud. The absence of having a customer
in front of you, face-to-face, is one obvious problem.
But even with retail transactions, the swiping of the
card and a resulting authorization merely means the card
has not expired and has not been reported as stolen.
Though you cannot completely avoid such risks, with certain
precautions you can definitely minimize them.
These frauds can lead to excessive chargeback rates and
the bank in turn may close your merchant account.
Here we give you a quick checklist of what you should
do to minimize but not eliminate your risk of being victimized
by fraud.
- Address Verification System (AVS) : Address
Verification system or AVS is a very potent tool in
stopping fraud. AVS compares a part of the billing
address submitted by the customer with the records
kept on file by the issuer of the credit card. The
AVS service is offered for free by many merchant account
providers; some however charge an additional fee.
For example, it generally only works with U.S. issued
cards, obviously a problem if you will be taking orders
from outside the U.S. Second, fraud artists can often
supply a valid address for the stolen card, if they
also obtained the true cardholder's address when they
took the card (e.g. from a stolen purse or wallet).
They then provide a different address - one to which
they have access - where they ask that you ship the
product to. But despite these drawbacks, AVS is still
very capable of stopping many attempts at credit card
fraud.
- Check the Order: Check, and recheck the order.
If you are manually inputting orders, you should take
the time to examine the data inputted by the customer
to find any discrepancy in data. If you see anything
suspicious, stop the transaction.
- Non-Matching Addresses: If the shipping address
and the credit card billing address do not match,
it may be an indication of credit card fraud. You
should consider telephoning the customer to enquire
why the discrepancy exists.
- Retail Sales: If you are selling face-to-face
in a retail environment, always check the expiry date
and see if the card is signed on the back. If it is,
examine whether the signature matches the signature
on the signed sales receipt. If you are still suspicious
of potential credit card fraud, ask to see some photo
I.D.
- Online Orders: With first time customers
of big-ticket items, ask the customer to send you,
by fax, a copy of his driver's license and credit
card.
- Bulk Orders: Watch out for unusual sales;
for example, sales of a large number of the the same
product from the same credit card, which could be
an indication that your customer plans to make a big
hit off of you and then resell the goods.
- Email Addresses: It is very easy to obtain
free email addresses and the identity of the person
owning the account is often impossible to ascertain.
The customer can hide behind an untraceable email
address from a free email service, if he has stolen
the card and the owner's address. You can minimize
this risk of credit card fraud by calling the customer
to take the order over the phone.
- Check Websites: Email addresses include,
after the @ sign, the domain name of their website.
Simply add www. before the domain name and check to
see if the website is blank or under construction
to find out if the customer has given wrong email
address. Also, see that your order form collects the
customer's IP address, which is an individual number
assigned to each computer. With the IP number, you
can locate the owner of the computer by doing an IP
search.
Use the above-mentioned checklist and closely scrutinize
every transaction. You will be way ahead in minimizing
risks with your merchant account credit card transactions.
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