Credit Card Fraud and Online Businesses
Though most people think that making on-line purchases is inherently risky for the customer the reality is that the retailer is at far more risk that the individual pruchaser ever is.
Protecting your On-line business from Credit Card Fraud
In general the risk of fraud is greater for on-line businesses as compared with regular businesses as you are dealing with streams of data rather than a physical person. Fraudsters also see on-line businesses as generally being soft targets for this very reason. Thankfully, however, there are steps which can be taken to significantly reduce the risk of becoming a victim.
Most importantly, always verify that any address supplied by a customer is actually correct and real. Your merchant account probably offers an Address Verification System that will verify that the address you have been given matches the billing address of the cardholder. If shipping a product to a customer ensure that the shipping and billing adresses are the same. If not investigate the transaction (it may be that the customer has registered an alternate delivery address with their card issuer, but again a simple query can inform your of this).
Be wary of unusual orders. As a fraudster can have no idea of a customer's existing relationship with you and they may begin ordering something entirely out of character. Another common ploy is for a fraudster to make one or two small purchases that check out fine to gain a merchant's confidence before making a large order on a fraudulent card.
Gain as much information as you can about the customer's credit card. On an on-line form always ask for the credit card's issue date, the name of the issuing bank and the CVV credit card security digits.
Even if you are a regular business owner and are interacting with customers directly you should be aware of some of the commonest scams. Maek sure that the customer's signature matches that on the card. Also make sure you know what that main types of credit cards actually look like as one of the commonest forms of fraud is the use of cloned cards that use the information forom real cards encoded into the magnetic cards and may even superficially look like real credit cards but they actually aren't. Also make sure that the information encoded on the magnetic strip matches the information on the face of the card (your terminal will help with this). If the data differ then the card is most likely cloned.