Electronic Retailer - April 2011 - 55

is taking place online or face-to-face, other key items to look for when watching for fraud include: • Purchasing a large amount of merchandise without regard to size, style, color, or price • Not asking questions when making major purchases • Refusing free delivery for large items • Making large purchases just after starting business or preparing to go out of business

Support From an Unlikely Source
While all these practices will decrease the risk of credit card fraud, there is another source of support for online retailers: their merchant services processor. Leading processors offer chargebackmitigation services that monitor customer disputes and alert retailers to potential problems. Many have also developed best practices their online retail clients can utilize to strengthen any internal policies and procedures. Partnering with a trusted credit card processor allows online retailers to not only leverage a depth of experience and knowledge about fraud prevention, but also to simplify compliance with processing regulations. This helps avoid the substantial punishment that can be meted out by the card associations. While credit card fraud can never be completely avoided, proactive prevention and protection will go a long way for online retailers and their customers. It is a small price to pay for retailers to lessen their financial impact and preserve their reputation. Art Gardner is a Marketing Analyst in the Underwriting Department of CardFlex, Inc., a premier provider of transaction processing services and payment technologies, including a comprehensive suite of merchant products and flexible services tailored to the business needs of online and other direct marketing retailers. He can be reached at agardner@cfinc.com or (866) 634-3044. 55

Once an address has been verified, merchants should ship only to that addresses – unless they are certain any alternate address provided is approved by the actual cardholder.
and the Address Verification System (AVS). Requiring the CSC from the back of a consumer’s credit card helps ensure the person making the transaction is the actual cardholder. AVS allows online merchants a way to ensure the address provided to them is the same address for the cardholder on file with the issuing bank. Once an address has been verified, merchants should ship only to that address – unless they are certain any alternate address provided is approved by the actual cardholder. Likewise, any international shipping should be done only when the request is confirmed directly with the cardholder. Requiring a signed receipt for delivery is also good idea when there are any unusual shipping requests. Another resource available to internet merchants is software that identifies and logs the IP address of the person making the purchase. This allows e-tailers to see if multiple charges are coming from the same computer. Likewise, it can be used to identify orders from foreign IP addresses that may require closer scrutiny. There are also third-party vendors who offer IP tracking services with greater depth than off-the-shelf solutions. These services can be customized with profiles and rules that match your exact needs. If you want to restrict transactions from certain geographic regions or to limit the number of transactions from a given IP address, these services could prove invaluable. E-tailers who also sell from a physical location should also be aware of the following when conducting a face-to-face transaction: • Make sure card is signed • Make sure the signature line has not been altered • Swipe the card and check the authorization response • Check that the numbers on the card match the numbers on the terminal • Make sure the signatures match And no matter whether the transaction

April 2011 | electronicRETAILER

Electronic Retailer - April 2011

Table of Contents for the Digital Edition of Electronic Retailer - April 2011