One of the good things about buying online with a credit card is that consumers are automatically protected against any fraudulent transactions. This protection covers everything from overcharging, goods not received to goods that arrived, but not as described.
This means that there is always the risk of a merchant receiving a “chargeback” in the case of credit card fraud. Traditional methods of preventing or reducing the risk include:
- Taking out chargeback insurance.
- Requiring faxed or scanned copy of the customer’s identification and/or credit card.
- Not accepting credit cards at all.
The problem with these methods is that they all either inconvenience customers or add to the overall cost of the purchase. However, there are easier, and possibly more effective ways to reduce or eliminate credit card fraud:
- Get the CCV number (the 3 digits at the back of the card).
- Get the issuing bank name, and if your bank supports it, confirm it with the receipt says.
- Don’t take credit card details over the internet, phone the customer up and speak with them. Watch out for anything suspicious during the conversation.
- Don’t ship to a hotel or PO Box – only the customer’s work or home address.
- Get the landline phone number of the customer and match it up with their shipping address either in the White Pages, or through matching the prefix with the exchange.
- Require a signature from the customer themselves (not their secretary or partner) for delivery. If possible, see if you can get the courier to ask for identification. Never allow the package to be re-routed to a different address.
- Do not ship to international destinations you don’t normally deal with.
- Do not split the transaction over a number of cards.
- Wait a couple of days prior to shipping. This will allow the issuing bank to ring the customer to confirm the transaction (since it will be thousands of dollars). This may not happen if the transaction is split over a number of cards.
- Charge one or two amounts between $0.01 and $10.00 to the customer’s credit card. Then tell them to ring you with those exact amounts. The customer will have to either ring the bank or log on to internet banking for this.
- Check the IP address (available from web logs and emails) and BIN number (first six digits of the credit card), to see if they match they match the customer’s country.
If still unsure after doing all these tests, ask the customer to transfer payment directly into your bank account. Of course, since this inconveniences the customer, and you aren’t charged merchant fees or taking any risk, so a small discount would be appropriate.
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