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[H989]How To Credit Card Fraud

by Mike Knudtson, Mik

If you are a merchant, particularly someone who sells products online, the chances of your business being exposed to credit card fraud is highly likely. For many businesses, credit card fraud is a cost that they apportion into doing business and they may even account for it in how the price products ? similar to how a business may account for bad or doubtful debts. In the UK for example, government published statistics reveal that credit card fraud has went up from ?83.3m 10 years ago to ?504.8m just before the introduction of the chip and pin scheme. Chip and pin is a system where by a number is assigned to each credit card, meaning a thief has to do more than just fake a signature to complete a purchase with someone else's credit card. This has been said to have reduced fraud by 13% since its introduction.

With so many different types of credit card fraud, it is important to have a strategy to address each one. This article offers an insight into prevention methods for well known techniques of committing credit card fraud.

Card Not Present Fraud

CNP fraud is among the fastest rising category of fraud. The main reason for this is that it is becoming much harder to commit fraud in person, especially with the introduction of Chip and Pin. As online credit card fraud increases there are some measures that all merchants can take to ensure their associated costs of being exposed to online credit card fraud can be reduced.

● Call back customers to confirm orders. Although this is also a cost center, it could be used as a technique when the transaction appears somewhat out with the ordinary

● Pay attention to transactions where the delivery address and cardholder address are different

● AVS or CSC checking does not fully remove all risks associated with transactions, but it removes the ability for fraud to be done base solely on acquiring a/c details with out having the credit card in person.

Card Present Fraud

Card Present Fraud has become increasingly hard to commit, and as a result it is no longer associated with being a white collar crime as is often the case with CNP fraud. Despite this, face to face or swiped card fraud can still be an issue which retail merchants still have to deal with. Following certain protocols can help to limit the chances of you being affected, and ensure that your business is refunded by following the correct procedures.

● Ask your employees to look for people who may appear uncomfortable. They should not confront then based on that alone, but they should certainly be discreetly vigilant when they do.

● Check that the card number that is embossed matches the card number on the receipt. Pay particular attention to the last 4 digits if this has to be done discreetly and promptly. If they are different then it is important to act. In situations like this it is likely that skimming has taken place.

Finally, large orders from overseas countries with US Billing address are almost always fraud so it's better to have these customers pay via western union or bank wire. Many times fraudsters will order a large order using a stolen credit card and by the time you've discovered the card is stolen you already shiped the order.

Because neither the Cardholder nor the card is physically present during the transaction, the merchant has no real way of easily determining whether or not they are dealing with a legitimate customer.

According to a report recently issued by the U.S. Federal Bureau of Investigation (F.B.I.) in conjunction with the Internet Crime Complaint Center (IC3):

?Credit and debit card fraud comprised 6.3% of all complaints received in 2006.?

This represents over $60 Billion (.U.S.) in lost revenue to merchants that accept credit and debit cards for on-line transactions. While some of those losses are covered by the Issuing Bank, who may often reimburse the merchant's if all of the bank's card acceptance and processing rules were followed exactly, some of that loss may still be passed back to the merchants in the form of charge backs.

You can help reduce your risk of experiencing credit card fraud by following these tips:

1. Review all Orders Carefully. Ensure that the customer filled in all of the appropriate fields on the order form. Check to make sure that the order passed your credit card processor's Address Verification Check (AVS). Most fraudulent credit card transactions fail to pass AVS.

2. Be suspicious of orders with a different Ship To and Bill To address unless the order is from an existing customer and this is part of their normal ordering process. Even so, stay alert if the customer has entered a different Ship To address from the one that they normally use.

3. Be alert for the use of Free Email Addresses. The majority of credit card scammers use free e-mail addresses from HotMail, Yahoo and other free e-mail providers.

4. Keep all transaction documentation. Make sure that your shopping cart stores the I.P. address that the customer used when visiting your site as well as the date and time of the visit. This information will be helpful if you are involved in a fraud investigation. If you have telephone contact with the customer, add their Caller ID information to the order record.

5. Be Suspicious of first-time high order amounts. If your first contact with a new customer is for an unusually high dollar amount, especially if they are requesting overnight delivery services, phone the customer to verify their contact information.

6. Verify customer telephone numbers and addresses using any of the free White pages web sites such as Whitepages.com.

7. If in doubt, call the customer. You can usually avoid being scammed by simply getting the customer on the phone at the telephone number they provided on the order form. If you are unable to reach the customer, or if the person at that number has no idea who the customer is, cancel the order. It's better to be safe than sorry.

8. Make sure that your order form requires the customer to enter the Card Verification Value (CVV) number that is printed on their credit card. And make sure that your software passes this value along to your credit card processor. Knowing the CVV usually means that the cardholder is in physical possession of the credit card and not just using a stolen number that they got from somewhere.

While there is no guarantee that following these 8 steps will reduce your credit card fraud experience completely, there's every chance that you can cut it back dramatically by simply being alert and following up on your suspicions.

Article Source : Credit Card Fraud

About Author

Both Mike Knudtson & Debbie Dragon are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Mike Knudtson has sinced written about articles on various topics from Credit Card Fraud, Credit Cards and Finances. Mike Knudtson is the co-founder of the Fastcharge.com and the founder of merchant account provider Electronic Transfer, Inc.. He has helped thousands of merchants set up ret. Mike Knudtson's top article generates over 4400 views. to your Favourites.

Debbie Dragon has sinced written about articles on various topics from Finances, Credit Cards and Kitchen Home Improvement. This article has been provided by Creditor Web. Creditor Web has the articles and other resources to help you choose th. Debbie Dragon's top article generates over 165000 views. to your Favourites.