Authorize.Net, a CyberSource Solution, is a leading payment gateway company with many years experience in combating credit card fraud. We asked Roy Banks, President of Authorize.Net, about common errors that merchants make with fraud prevention.
PeC: What's the biggest fraud-prevention mistake made by ecommerce merchants?
BANKS: Failure to use the Address Verification Service. It's a free option from most payment gateway companies and will potentially lower a merchant's processing costs when used. Unfortunately, many merchants don't use it. Another common mistake is merchants don't always require the card verification code from the cardholder at the time of sale. This is also a service that is free from most payment gateway providers. By using both AVS and Card Verification Code, merchants will be able to better detect and prevent thieves who attempt to purchase with a stolen credit card number.
PeC: Where can a merchant turn if he's confused or has questions related to fraud prevention?
BANKS: The merchant account provider is a great resource. Payment gateway companies can help, too.
PeC: Beyond using AVS and requiring Card Verification Code, what other fraud prevention efforts would you suggest?
BANKS: Remember it's important to know your customer and know your order. By that, I mean to pay attention to order characteristics such as recognizing when an order is coming from a locale that doesn't really fit your customer profile or the shipping address belongs to a country with high incidences of fraud.
Avoid post office boxes. When in doubt, call the customer ordering the product to confirm order detail and information.
There are also some very sophisticated fraud detection tools available to help merchants make better decisions about order acceptance. With these services, a merchant can potentially exclude orders that don't fit acceptable order criteria. Merchants can also exclude orders from certain countries or not process transactions during certain times of the day. He can even suspend and investigate suspicious order activity. There are many other rules and filters a merchant can set up with these advanced tools.
Thursday, April 24, 2008 · 09:32 AM
As an Authorize.Net user, I know these services help us at www.gThankYou.com
If a transaction bounces because of a bad address, the only thing to do it get to the bottom of it. Sometimes it's a simple mistake (e.g. home vs. workplace address for the credit card) other times, when you say the address is incorrect, the "customer" knows the jig is up and disappears.
Thank you for an informative post. Rick
-- Rick Kiley/ www.gThankYou.com
Friday, April 25, 2008 · 01:29 PM
The great thing about the Internet is that you can reach customers from anywhere around the world without the presence of the physical store. However, given the ease of buying things online and the anonymity offered by the Internet, fraud has become rampant. As long as the fraudsters have access to the credit card information, traditional checks such as AVS and CVV will not work as well.
Often times, you can look at other characteristics about the transactions to get a sense of the risk of the order. For example, you can take a look at the customer's IP address and compare that against the billing address to get a sense of where they are located and how risky that transaction may be. For example, if the user is located in Nigeria but is using a US credit card, then the transaction statistically would be considered suspect. It'll depend on your tolerance for risk whether or not you want to deal with such a transaction.
There are many companies out there that provide these type of solutions.
-- Ed
Wednesday, April 30, 2008 · 06:08 AM
I treat all international orders as fraudulent. Our policy is to offer bank wires as the only form of payment. Indonesia, Malaysia, Nigeria, and India are 99.9% fraudulent transactions. I do make certain concessions with Australia and New Zealand, I haven't had any issues down under.
The fraudulent orders I have received from these countries have all had valid CVV codes. You have to wonder how they get these. Typically the AVS are not supported overseas.
What we need is an internet based bank wire transfer system that will work with international orders. If there is such an animal, please post it!!!
-- Louis
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