How Online Merchants Can Prevent Credit Card Fraud
Who pays for fraudulent charges?
In almost all cases, the merchant pays. In fact, the credit card company can make a profit on a fraudulent charge, since they charge back the full amount to the merchant, charge the merchant a charge-back fee (typically $10-$25 per charge), and may still try to charge the cardholder for the $50 they are responsible for.
Is credit card fraud growing?
Almost all surveys show that there continues to be a rapid growth in credit card fraud. The causes are more online and telephone sales, where the cardholder is not present, and greater sophistication by credit card theft rings.
How can I protect myself?
- Always verify the address using the AVS system provided by your processor.
- Shipping and billing address should match.
- Use the credit card verification value number (3 extra digits on the card), if available.
- Don't accept orders from "free" e-mail addresses. Insist on a valid, traceable e-mail.
- Check out the customer's web site, if possible.
- Be careful of unusual items or a sudden large rush order.
- Phone the customer to verify the order.
- Collect and save as much information on the order as you can.
- Have a "we prosecute: policy and publicize it.
- If high volume, contract to automate some of the above.
- Do not process transactions for other merchants.
© Copyright 2000 Raymond S. Kulzick. All rights reserved. 001224.
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Copyright © 2000 Kulzick Associates, PA - Last modified: September 13, 2008