Anti-Fraud
Preventing online business fraud
- Many payment gateway providers use the Address Verification System (AVS).
- A CVV2 number is the three last digits located on the back of a credit card, or the four stand-alone digits on the front of an Amex card.
- Request information from the customer
- Check the IP address
- Check your payment gateway interface
- Email address awareness
- Shipping addresses
- Log analysis
- Overseas orders.
- Unusual orders
- call the cardholder or bank
- Ask for photo identification
- Make your anti-fraud policy visible
- Utilize specialist fraud screening services
Cybercrime
- a criminal activity in which a computer or network is part of the crime
- No law against cyber crime
- Difficult to track the hackers
- self protection
- no boundaries of working or occurring
- breaching national barriers
Anti Fraud Tools
- • What fraud detection tools should an e-commerce provider should have?
- • IP geolocation/address
- • Cardholder authentication via 3-D Secure Service
- • The AVS instrument
- • Chargebacks
- • Automated Order Review vs. Manual Order Review.
- • the implementation of effective security measures
Chargeback
- A chargeback is a reversal of a credit-card transaction, as viewed from the perspective of the merchant. It usually occurs when a consumer files a complaint with their bank or credit/debit card provider. This usually happens when a consumer discovers fraudulent transactions on their statement.
- The bank will investigate complaints, and will “take back” the value of the original transaction, together with an additional fee (from $0 to $50 USD, depending on the bank/provider used) directly from the merchants account, unless the merchant can prove the transaction was legitimate
- The merchant loses the goods or services sold, the payment, the fees for processing the payment, any currency conversion commissions, and the chargeback penalty.
- The merchant loses legitimate sales by incorrectly blocking legitimate transactions.
- A merchant is billed for chargebacks as they occur, along with other fees and settlements associated with credit card acceptance.
- Thieves occasionally abuse the chargeback system
- Chargeback processing (handling) is complex as a result of frequent rule changes by the major credit card companies (MasterCard, Visa, American Express,
- It is possible for the chargeback and associated fee to cause an overdraft or leave insufficient funds to cover a subsequent withdrawal or debit from the merchant’s account that received the chargeback. This could cause pending checks to be returned due to non-sufficient funds. Unless the merchant detects the chargeback in time to cover pending debits, a snowballing effect of penalties assessed could result.
Signs Of Online Credit Card Fraud
- If the customer wants the item shipped as soon as. The thief figures the merchant will move so fast to process the order that there won’t be too much scrutiny. A dead give away and cause for you to seriously question the order is when the overnight shipping costs approximate the item’s cost.
- Check out the phone number and e-mail address provided by the customer. Does the area code match the city and state of the customer? If the customer uses a free Yahoo!, Hotmail, or Google account, does it correspond to the customer’s name?
- If your store has referrer info on orders, like Yahoo! Stores provides, for example, examine how the customer found you. Thieves tend to search on phrases like “international shipping” or “overnight delivery” instead of the category or keywords products are advertised under.
- Check the IP address. it identifies the computer network that the order came from. Your order processing software should also show you the IP address that the order was sent from. my Yahoo! Stores you just click the address and it does a trace, identifying the network location
- Watch out for mail forwarding operations and shipping to Post Office Boxes. Many thieves order your items from overseas and have them shipped to maildrops. Run the customer address through Google. Often you’ll see it listed to a service for mail forwarding company.
- Be suspicious if the shipping address and the billing address on the order are different.
- Always expect fraud when you get multiple orders submitted from the same customer in sequence, using the same credit card, or the same ship-to address.
- Beware of unusually large orders.
- Watch out for orders with multiple quantities of the same product. It is common for fraudulent orders to be large quantities of a single item.
- Look for typos, grammar and punctuation errors.
Credit Card Fraud and Online Merchants
- • card fraud is a growing threat to businesses selling goods or services through the internet
- • online retailers have to offer their clients payment by credit card if they don’t want to lose customers.
- • In cases where fraudsters use stolen or manipulated credit card data the merchant loses money because of so-called “chargebacks
- • overall increase in organized credit card fraud.
- • Chargebacks not only cause financial loss to the merchant but threatens business
- • If a merchant’s chargeback ratio exceeds certain limits defined by the credit card organizations, credit card acceptance can be revoked
- • Sophisticated and effective methods of fraud protection are now available, which can help online merchants to decrease chargeback ratios dramatically
Credit Card Payments Online
Accepting Credit Cards online/what do the credit card systems offer?
- • Increased sales
- • Competition
- • Accept cc within 24 hours
- • Offers of web-based credit card processing terminal to process transactions
- • A credit card merchant account
- • Secure, encrypted, SSL (Secure Socket Layer) for secure transactions
- • Online payment processing software
- • Ability to accept all Major Credit Cards
- • online reporting and management of your transactions.
- • ecommerce shopping cart for your web site
- • Search engine submission
Choosing a Merchant Account Provider
- research rates
- benefits
- third party organisations
- paperwork that will be required to obtain your card processing facility
- on average about three weeks to set up a merchant account
Accepting Credit Cards on Your Website
- Why do it? Impulse buyers.and international market.
- Methods of Accepting Credit Card Payments – Using Your Own Merchant Account/Through a Third Party Merchant.
- Which Method Should You Use?
- Third party merchants
Merchant Account or third party merchant account?
Merchant Account
- funds from your customers are directly deposited to your personal or business bank account
- control over your account because it is regulated by the Federal Banking Regulations
- set up your account to accept credit cards, gift cards, tele-check and other non-cash Internet transactions
Third party merchant
- funds are deposited to the third party account
- if they aren’t a bank then the Federal Banking System does not regulate them
- may freeze your account
- limited to accepting payments based on the third parties regulations
- takes longer to receive your money from the third party account
What does your Web Site need to Accept Credit Cards?
- What does the website need?
- An electronic shopping cart system.
- A payment gateway service.
- A credit card processor.
- An Internet merchant account issued by a bank or other financial institution or service bureau.
Online credit card processing: How does it work?
- Your customer submits his credit card information at checkout on your Web site.
- The shopping cart software sends the transaction to the gateway.
- The gateway routes the information to the processor.
- The processor contacts the bank that issued the customer’s credit card.
- The issuing bank approves or declines the transaction. The processor routes the result back to the gateway, which then passes the result back to the Web site shopping cart system