Can You List 21 Ways to Prevent Credit Card Sales Fraud?

How To Avoid Lost Time, Lost Money
& Lost Products.
Lost time, lost money and lost products are the real-life consequences of fraudulent orders. Maybe you’ve been lucky so far and your business hasn’t been affected by fraudulent activity. But what happens when your luck eventually runs out?

It’s not a question of IF – It’s a matter of WHEN.

You see, dishonest people are always trying to find ways to steal. That’s how they earn their living. That’s why you must be on guard against fraud 24-hours a day/7-days a week. And that’s why you need to read this special report detailing how easy it can be to keep fraudulent orders from impacting your bottom line.

In this special report you will learn:

ü The two most common forms of fraudulent activity

ü How to identify them

ü How to prevent them from occurring

ü How to stop them, once and for all.

If you’re the owner of a mail order, telephone order, or Internet order business, you are particularly vulnerable to fraud because you take orders without actually seeing your customers. You don’t swipe their credit cards and you don’t get their signatures. If you want to reduce your vulnerability, there’s no time to waste.

Here’s what you need to know right now.

The Two Most Common Forms of Fraudulent Activity Involve Dishonest People Who:
Use stolen cards to purchase your products. In this scenario, credit cards are either physically stolen or the account numbers are obtained by phishing computers connected to the Internet. Once obtained, credit card information is then sold online to others with dishonest intentions.

Place an order and then claim they never received the product or claim that the product was not as described. Here, these individuals either ask for a refund, or they file a chargeback claim. Either way, they still keep the product.
Now that you know how they operate, here’s what you can do to protect your business.

Implement these strategies and I guarantee your fraud and chargeback rates will dwindle!
1. Put your Guarantee/Refund Policy In Writing.

You must clearly state your company’s guarantee and refund policy. But don’t stop there. You also want to make sure that buyers are forced to check or initial a box stating that they have read and agree with the company guarantee/return policy before their orders are processed. Ideally this step should take place during the checkout stage.

Your refund policy should be simple, straightforward, and limited to no longer than 90 days. Once established, it’s important to convey your refund policy to your merchant account provider. You want the merchant account provider to be aware of your maximum refund period and also that you will not accept refunds after this amount of time has passed. That way, if a customer files for a refund after your refund policy limit and you can show that your refund policy was plainly stated, you should not have to return the money.

Remember though, it is always best to give a refund to any purchaser who requests one. Doing so may help to prevent or diffuse the purchaser’s anger. Angry people may try to harm your business, spread rumors, and file chargebacks.

2. Force purchasers to accept your “Terms & Conditions Policy”.

Before a purchaser can complete an order, display your Terms & Conditions Policy along with a check box to indicate the purchaser’s acceptance of those terms before the order is completed. In addition you can include a Terms & Conditions Policy statement link on every page. A good place for this is in the footer.

3. Always Use an Address Verification Service (AVS).

An Address Verification Service or AVS requires that the purchaser’s billing address associated with the credit card used match the information that was provided at the time of order. This precaution operates under the presumption that a thief will not necessarily know both the card holder’s name and billing address zip code. AVS checking is available from your merchant account provider.

4. Pay Attention to Differences in Billing and Shipping Addresses.

Whenever the billing address on an order is different from the shipping address, you should call the card holder to confirm the order before shipping the product. An example here would be an order with a billing address in Texas, and a shipping address in someplace like Florida or Romania or even a Post Office box.

5. Pay Attention to Differences in Billing Address and Contact Phone Number.

Similarly, if the billing address on the credit card used to make a purchase is in Detroit but the contact phone number is a New York City number, for example, it is a good idea to call the number given and ask questions about the order. You can sometimes use a reverse lookup service to find out the billing name for any questionable phone number.

6. Pay Attention to Differences in Billing Address and IP Address Location.

If you ask, your merchant provider will alert you whenever a purchaser’s IP address is not in the same location as the billing address. This is especially important when the IP address is located in a different city or country.

7. Know When a Purchaser Has a History of Chargebacks.

If you request it, your merchant provider can alert you whenever it knows that a purchaser has a history of chargebacks. A chargeback is a situation in which a purchaser contacts the issuer of the credit card used to make the purchase and complains that the merchant refused to issue a refund.

Note: Chargebacks are BAD for you, the merchant. Once you have too many, your merchant provider can freeze your account and put you on the MATCH list. Once on this list, you won’t be able to get another merchant account provider!

8. Pay Attention to Orders Requesting Rapid Delivery.

Be alerted to orders for physical products that request/require overnight delivery. Thieves want to pay for and receive merchandise quickly before getting caught.

9. Obtain Proof of Delivery.

Obtain Proof of Delivery as often as possible. Obtaining proof of delivery is easy for physical products; just ask your shipper to take care of it for you.

For digital products it can be a bit more of a challenge. You could send an email to the buyer with a link to a product registration page. Offer free upgrades or a bonus download product for registering.

If you can individually serialize your products, ask that the serial number be entered into the registration form. If you are selling software, you could force the user to register during the install process or the first time the software is run.

PDF files, such as e-books, can be locked so they require a PIN code. Send the PIN after the user fills out the registration form.

10. Flag Orders That Use Free Email Addresses.

A favorite among people with dishonest intentions are free email addresses like Hotmail and Yahoo that do not require a credit card or other identification to set up. When you see free addresses being used, it is a good idea to pay close attention to any associated orders.

11. Beware of Suspect Email Names.

Always be on the lookout for email names that don’t quite look right. For example, fake email addresses might use all capital letters. Or they might use a name that would be impossible to get. Two good examples are:


12. Flag Email address that use a person’s first and last name and a free email address.

Two examples of this scenario are the names, Barbara Ohlson along with a Yahoo address, and the name, Roscoe Jones along with a Hotmail address,

Please note however, that these types of email addresses are commonly used for legitimate orders, too. So never assume that email addresses like the ones described above are fraudulent. Just understand that these addresses have a higher probability of being fraudulent and require closer examination.

13. Flag Email Addresses with English-Sounding Names and Free Email Addresses.

This one is a little tricky to explain, but you will know the potentially troublesome email address when you see it. Anytime you see an email address that does not appear to be a regular word, it should be more closely investigated. Two examples of what you should be on the lookout for include things like:

Name: Bonnie Barnes, Email address:
Name: DAN PHAN, Email address:

14. Beware of Ordering Information Using Both Upper and Lower Case.

These are situations where part of the ordering information is listed in all capital letters and another part such as the name or email address is listed in lower case (or vice versa). When you see this, it may be because the information stolen was all in upper case. The stolen information is then copied and pasted onto the order form (instead of being manually entered). Other ordering information that is entered manually will usually be entered using lower or mixed case. Such a discrepancy in the use of case should raise a red flag and be further investigated.

15. Create and Display a Fraud Prevention Policy.

A fraud prevention policy posted on your website can act as a powerful deterrent. Such a statement need only say words to the effect of: “In order to prevent fraud, all sales orders are reviewed and confirmed by calling the purchaser before being shipped.” If a person intent on committing fraud sees that there’s a chance of being caught, that person probably will move on to another website where sales are not as closely monitored.

16. Review Large Orders Before Processing.

Oftentimes someone using a stolen credit card will purchase a lot of items right away, before the credit card is inactivated. Large purchases are especially prevalent when using the Difference in Billing Address and Shipping Address scam mentioned previously (#4).

Note: Thieves sell credit card numbers and even the complete billing address for that credit card. Some thieves will just make up names and email addresses to use when placing these orders.

17. Have Your Phone Number AND Merchant Name Displayed on Credit Card Statements.

When credit card holders review their monthly credit card statements, they should easily recognize the name of the merchant from whom an item was purchased. When the merchant is unrecognizable, the holder may immediately contact the credit card issuer to file a chargeback.

However, if the card holder sees a merchant phone number next to the purchase in question, he or she may call the merchant’s number to inquire about the charge before calling the card company and requesting a chargeback. Remember, your goal is to avoid getting chargebacks whenever possible.

18. Be on the Alert for Multiple Orders.

Thieves have clever ways of fishing for a valid credit card number. Oftentimes they will place several orders, one after another, changing a number or two on the card each time until it works. This is similar to the way hackers try to find valid passwords.

Other times, thieves will use a stolen credit card several times before the card is shutdown. Sometimes when someone orders online, they click on the order button a couple of times because they aren’t sure that the order went through the first time. This often happens when there is a slow Internet connection somewhere between the user’s machine and your web server, or when your credit card processor’s server is busy.

Try adding a note next to the order button telling the user to only click once. You’ll get best results if you say this: “Warning! Only click the order button once to avoid having your card charged multiple times.”

19. Keep Written Records.

Get in the habit of keeping a record of all contact you make with any of your customers/clients. When needed, these records will help show that you were using proper security procedures and that you made a legitimate attempt(s) to contact the rightful purchaser in the event of a problem.

20. If The Order Smells Fishy…

Remember, anytime an order does not look right, even if you can’t put your finger on exactly what the problem is, take a moment to contact the purchaser. Do this before fulfilling the order. If you are unable to make contact, you can always cancel, void, or refund the order. Yes, it’s hard to pass up a sale. But sometimes it’s better to not make a sale than to deal with the hassle and potential consequences of a fraudulent sale.

21. Take Advantage of Gateway Software Fraud Screening Options

Gateway software for processing orders usually offers some degree of fraud filtering. For example, in addition to name and zip code (AVS) screening, gateways can have the option to scan transactions with additional fraud filters. However there may be an extra charge for these enhanced services, so weigh the costs against your fraud experience. Here are some of the more common enhanced filters:

Negative Database
The Negative Database declines transactions based on IP address, email address, dot-extension, or credit card number.

Anonymous Surfer Block
The Anonymous Surfer Block stops transactions from surfers attempting to hide their identities on the Internet, either by using an anonymous proxy server or an anonymous email domain.

High Risk Country Filter
The High Risk Country Filter automatically blocks transactions from countries with a higher incidence of fraud than what’s considered the norm.

Name/Address Junk Filter
The Name and Address Junk Filter automatically blocks transactions if the name and address information entered exhibits suspicious patterns. The filter can block profane information, suspicious typing patterns, or invalid email addresses.

Email Address Bounce Check
The Email Address Bounce Check automatically aborts or refunds sale transactions when the system failed to deliver an email receipt to the customer within 12 hours. This could happen because the customer entered an invalid email address, or because his/her email box is full, or any of a number of other possible email delivery failures. It should be noted, however that if a bounce occurs after more than 12 hours, no action is taken.

Declined Order Limits
The Declined Order Limits filter stops customers from trying a declined card too many times, or trying too many different cards.

Approved Order Limits
The Approved Order Limits settings stop customers from placing too many orders, or charging too much money, on the same card for similar orders.

Subscription/Membership Limits
Subscription and Membership Limits prevent members from taking advantage of free or discounted trials. When this is activated, members cannot sign up for the same subscription repeatedly and are required to renew their existing subscriptions.

Maximum Credit Risk Per Card
This setting limits the amount of charges a customer can put on one credit card within a period of time.

Virtual Terminal Limits
This feature sets the warning level for Virtual Terminal transactions. Any transaction above this dollar amount will display a warning before processing a virtual terminal transaction.

Order Integrity
Order integrity prevents attempts to edit the HTML from a merchant’s shopping cart and changing the details of an order just before purchase. If the data sent with the transaction does not match the encrypted Order Integrity data, the transaction is rejected.

U.S. Location Verification
This tool verifies the existence of U.S. address (zip code, street, state, etc.). While AVS only checks the zip code or first few digits of the street number, this tool checks the entire address to figure out if the address even exists. This added security determines that any address entered into the system, be it billing or shipping, is an actual, valid, and existing U.S. postal address.

And There You Have It

21 Proven Ways toPrevent
Credit Card Sales Fraud

Take these pro-active actions and your losses due to fraud will be greatly minimized. Better yet, you’ll have payment processing peace of mind.