Tips for Avoiding eCommerce Consumer Fraud

By TopTenReviews Contributor
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An eCommerce business can provide flexibility, convenience and often it can be a lucrative experience. However, as an online merchant, you must be prepared for the bad with the good. Here are some tips to protect your business from fraud:

1. Check Unusual "Ship To" Addresses

Look for requests to send merchandise as a "gift" to a different address - most notably a foreign address. Thieves often use this trick to ship product to a destination where they can pick up the product without being tracked. Usually, a quick courtesy call to the cardholder will clear up any suspicions. Another suggestion, don’t provide a separate shipping address option - ship all products to the billing address.

2. Identify Big Spenders

Thieves will often pay excessive fees to ship products quickly. They also like big-ticket purchases. If they can use the stolen card, receive the merchandise and resell it promptly, they make a large profit. Early detection of these activities and follow-up can save you money in the long run.

3. Secure Payment Gateways

Securing your payment gateway - the behind-the-scenes transfer of personal information between your transaction page (the page where the order is placed), the merchant account (your bank) and the credit card company - is one of the most important components required to accept credit cards for your eCommerce business.

Credit card processing services offer fraud protection and secure gateways for their clients. They can be expensive, but no eCommerce business can operate without it. Another option - look for an all-in-one eCommerce software solution that includes credit card processing.

Whether you decide to purchase a separate credit card processing service or an all-in-one eCommerce solution, the following fraud protection tools should be required features:

  • Secure Socket Layer Encryption (128-bit encryption) System This protection system keeps all credit card data and personal information safe from the prying eyes of hackers and thieves.
  • Rules-Based System for Credit Acceptance or Denial This system relies on a series of steps to verify card authenticity. If any of the steps are not satisfied, the transaction is terminated. Such steps include: 

    • Verifying the billing address with the address registered on the credit card.
    • Identifying the access code, a 3 to 4-digit number printed on all major credit cards. Most often, without a card this number cannot be provided.
    • Discrepancies between cardholder name and the credit card number issued. 

As a merchant, the financial responsibility of all transactions belongs to you. Be aware of the warning signs and protect your business by selecting a payment gateway that provides ample protection for your accounts. By taking the offense, you can avoid many fraudulent purchases and concentrate on the important task of selling your product.

References

AV Talk. 2003, June). Retrieved on October 15, 2004 from: Avtalk

Credit Card Fraud Management. (n.d.) Retrieved on October 15, 2004 from: CyberSource

Fraud Protection. (2004) Retrieved on October 15, 2004 from: TopTenREVIEWS

Fraud Protection. (2003) Retrieved on October 15, 2004 from: 2C Processor USA

King, Jeff. Multi-Pronged approach is Necessary. (2002, September). Retrieved on October 15, 2004 from: Tech News World

MacVittie, Lori. Online Fraud Detection Takes Diligence. (2002, February). Retrieved on October 18, 2004 from: Network Computing

PayPal Fraud Prevention Tips for Sellers. (n.d.). Retrieved on October 15, 2004 from: PayPal

Sophisticated Technologies help Guard your Credit Against Fraud. (n.d.). Retrieved on October 15, 2004 from: MSN

 

 
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