Internet Credit Card Fraud – How to Mitigate Chargebacks
- Utilize a robust Payment Gateway Setup.
- Always ask: “Is the Order too good to be true?”
- Take extra precautions with international orders.
- Verify the credit card and the buyer.
Payment Gateway Setup
CVV2 (Card Verification Value) is a three-digit security code that is printed on the back of Visa, MasterCard, and Discover cards immediately following the account number. CVV2 for American Express cards is a four-digit security code that is printed on the front of the card.
- The customer has possession of his/her credit card.
- The credit card account is legitimate.
Is the Order Too Good to be True?
- Orders with a shipping address that is different than the billing address. You may need to do additional verification unless it is a known, good-standing customer.
- Orders with large purchase amounts, usually over $250. This number may be higher or lower, depending on the type of products you are selling.
- Orders with multiple quantities of the same product. It is common for fraudulent orders to be large quantities of a single item.
- Multiple orders being shipped to the same address and paid for with the same or different credit cards within a 12- to 24-hour period. Merchants need to be wary of this even during the busy holiday season.
- Orders to be shipped to Post Office Boxes.
- International orders requesting overnight shipping.
International Orders Require Extra Caution
Verifying the Credit Card and the Buyer
- Verify the BIN number. The first six digits of a credit card is the bank identification number (BIN). The BIN number indicates the specific bank which issued the credit card. Visit http://www.bindatabase.com/search.php and enter the BIN number. If the issuing bank is located in a country other than where the order is originating, further verification is recommended. This service also provides the issuing bank’s contact information.
- Match the card to the person. Contact the issuing bank to verify the card being used is issued to the name of the person making the purchase.
- Fax Verification. Ask the buyer to fax the front and back of his/her credit card and another form of identification. This works better than a phone call.
- Be aware that overseas banks are different than U.S. banks. Many overseas banks do not support CVV2 (Card Verification Value) and AVS (Address Verification System) during the credit card authorization process; therefore, be aware these fraud prevention features may not be available from many overseas banks.
- Contact your Internet Merchant Account processor for assistance regarding questionable orders.
- Purchase advanced fraud-detection tools. Many Internet payment gateway providers offer advanced fraud protection tools, and some Internet merchant account processors may offer guaranteed services at modest prices.
- Choose an Internet Merchant Account processor which has a dedicated chargeback department to assist you with any chargeback issues.