Fraud Prevention

Field Test: Fraud Prevention, Part 2 of 3

In Field Test, Practical eCommerce gathered ten seasoned ecommerce merchants and asked each of them the same questions around a given topic. This month’s topic is fraud prevention.

The participating ecommerce merchants are: Dave Norris, House of Antique Hardware; Chris Stump, Only Hammocks; Mike Feiman, PoolDawg; Dan Stewart, Xtreme Diesel Performance; Roman Kagan, Appliance Parts Pros; Cindy Barrileaux, Write Your Best; Claudette Cyr, Gear-Source; Mike Butler, Bloom Designs Nursery; Kristen Taylor, Juvie; Jeff Muchnik, RedBox Tools.

The responses for three of the ten merchants follow below. The answers are shown to preserve anonymity.

PeC: Has your ecommerce business been the victim of credit card fraud?

  • FIELD TESTER 4: In over eight years in business we haven’t had a single case of credit card fraud. While no company can claim to be 100 percent invincible, we try to utilize every option available to prevent fraudulent transactions.
  • FIELD TESTER 6: From the perspective of chargebacks, we have. We have never been hacked and do not store credit card information on file.

PeC: How did the fraud occur?

  • FIELD TESTER 6: Chargebacks can happen for a number of reasons, but generally it is the result of a buyer using a stolen credit card.

PeC: Does PCI compliance help prevent fraud?

  • FIELD TESTER 4: I believe it does. It forces a merchant to scan their site for possible vulnerabilities on a regular basis. This task is not as complicated as it sounds. There are several companies who can handle it for you for a reasonable fee.
  • FIELD TESTER 5: It has probably caused companies to take a position similar to ours by not storing credit card information on their systems.
  • FIELD TESTER 6: Yes, we have always followed the PCI compliance guidelines.

PeC: What steps do you now use to prevent fraud from occurring?

  • FIELD TESTER 4: Without naming all, we use address verification, vulnerability scans and order verification by phone when over a certain amount.
  • FIELD TESTER 5: Requiring billing address validation and security codes.
  • FIELD TESTER 6: We follow PCI guidelines as well as employ tools from Cardinal Commerce to protect against chargebacks and fraudulent orders.

PeC: Do you use third-party fraud detection products?

  • FIELD TESTER 4: Yes.
  • FIELD TESTER 6: No. Our fraud filtering methods are proprietary.

PeC: Which one(s)?

  • FIELD TESTER 4: ScanAlert and Verisign.
  • FIELD TESTER 6: We also use Verified by Visa and Mastercard Secure Code through Cardinal Commerce.

PeC: What advice would you offer to other merchants concerning credit card fraud?

  • FIELD TESTER 4: Don’t be afraid to spend a little money on fraud prevention. Your customers’ peace of mind is a worthy investment.
  • FIELD TESTER 5: Require as many validation processes as the customer will accept,and rely on a top tier processor.
  • FIELD TESTER 6: Set up order review guidelines, and don’t stray from them. Teach your employees how to identify suspicious orders. When they come up, take the time to research the order. Participate in the Verified by Visa and Mastercard Secure Code programs.
PEC Staff
PEC Staff
Bio   •   RSS Feed