June 15, 2021

Simple Fraud Prevention Tools & Tips for Online Businesses

Simple Fraud Prevention Tools & Tips for Online Businesses

Fraud detection should be top of mind for every business, but particularly for those selling online. Whether it’s friendly fraud where customers don’t recognize legitimate transactions they made and request a chargeback, card testing where thieves try to determine if stolen credit card data can be used to purchase goods, or any number of other costly tactics, shielding your business from fraudulent activity is more important than ever. Start protecting your eCommerce business today with the following easy-to-implement fraud prevention tools and tips.


Use Extra Caution with Online Transactions

Customers love doing business online because it’s hard to beat the convenience. But for merchants, online sales present certain risks. When buyers pay online or over the phone, the physical credit card is not present for the transaction, hence the name card-not-present (CNP) transactions. CNP fraud is highly prevalent, costing merchants billions each year.

A smart way to prevent CNP fraud on your website is to require customers to input their card verification value (CVV) number for all online, over-the-phone, and mail order purchases. The CVV is the 3- or 4-digit number usually on the back of the credit card. Additionally, request that customers enter the card’s billing zip code when making their purchases to lessen the occurrence of fraud.


Avoid Friendly Fraud

Friendly fraud, also known as chargeback fraud, occurs when your customers don’t recognize your business’s name on their credit card statements and initiate a chargeback. Chargebacks are a common and expensive problem for merchants of every type, so be sure your business’s name is clearly represented and recognizable on statements. For example, if your company’s official name differs from your online store’s name, contact your merchant services provider to confirm it’s your store name that actually appears on your customers’ statements.


Communicate with Customers to Deter Fraud

When corresponding with customers about their orders, include your company’s name and logo, as well as list the item(s) purchased, the quantity, and price to remind them what they purchased and the total paid, which reduces the chance of them forgetting a purchase and initiating a chargeback. The itemized order details are particularly important to include on:

  • The order confirmation webpage
  • The order confirmation email
  • The shipping confirmation email

It’s also critical to notify your customers if there is a shipping delay that impacts their order. If their items won’t arrive within the original timeframe, give your customers options to see if they’d rather wait for their order, or cancel it and receive a refund. For cancellations, it’s better to refund the money and keep a customer happy to ensure repeat business than to ship goods to a person who may not be there to receive their items and request a chargeback.


Employ CAPTCHA on Your Website

CAPTCHA stands for Completely Automated Public Turing test to tell Computers and Humans Apart. The name may sound strange, but it’s a simple challenge test—such as a remedial math problem or typing in an obscured word—used to determine if a customer on your website is a human as opposed to a scamming robot. Adding a CAPTCHA test to your website or online store is simple and can often be done with a plugin. While the downside is that they require your customers to complete an extra step before their order is submitted, CAPTCHAs significantly increase security and they are so commonplace, customers have come to expect them when buying or completing forms online.

Fraud Detection Tips

Be on the lookout for suspicious online sales, which may include:

  • Abnormally large orders, especially with no previous contact from the customer
  • Rush orders and/or orders placed with overnight shipping for large quantities or high-priced items
  • Missing contact information
  • Refusal to provide a CVV number
  • Orders shipped to an address other than the card’s billing address
  • Orders from foreign countries, particularly if most of your store’s customers are U.S.-based
  • Orders from U.S. cards that are being shipped to a foreign country
  • Billing addresses that don’t match what’s on file with the credit card companies

While by themselves these factors may not signal that a transaction is fraudulent, if several occur in an order, it’s wise to investigate the sale before shipping the items, lest you be out valuable inventory.


Train Staff to Prevent Fraud

Teach your employees to remain vigilant against fraud and employ best practices when it comes to their work habits. Besides monitoring orders for unusual or suspicious activity, tell them not to open attachments from unknown or unverified sources and not to log into company networks using a public WiFi connection since these actions open the door to malware infections. Additionally, offer frequent reminders on how to prevent fraud to keep the policies top of mind.


Take Advantage of Easy-to-Use Fraud Prevention Tools

eCommerce businesses taking advantage of solutions like Authorize.net and its Advanced Fraud Detection Suite (AFDS) are way ahead when it comes to outsmarting fraudsters. The suite has a wealth of profit-protecting benefits and fraud detection tools designed to help identify suspicious activity and filter out the good transactions from the problematic, including:

Reduced Chargeback Fees & Overall Costs
Minimize and prevent authorization and chargeback fees as well as possible inventory loss resulting from fraudulent transactions

Card Testing Prevention
Detect and block malicious card testing attacks to reduce financial losses from fraudulent purchases

Protection of Hard-Earned Profits
By maximizing legitimate transactions, you’ll have a better defense against potential fraud

Flexible Security Flags & Filters
Set filters based on Transaction Amount & Frequency, Country, and/or IP Address to restrict the likelihood of bogus transactions

Per-Transaction Notifications
View up-to-the-minute details on every transaction, initiate authorization holds, and decline flagged transactions

Shipping Address Verification
Identify potential fraud by comparing the shipping address to the origin of the IP address placing the order

With such security protocols in place, your business can approve, deny, and even isolate certain transactions based on preset filters. Specific, detailed features within the AFDS allow you to initiate authorization holds and shipping address verifications, while declining flagged transactions.

To learn more about how these solutions can help your online business operate in a more secure way, contact Electronic Payments’ Merchant Support team at 800-966-5520 – Option 4.

Get more information about partnering with Electronic Payments for secure merchant services and payment processing, including a PCI Compliance wizard to help protect your business against credit card fraud.

Contact us today!