Here
are some anti fraud measures
which may help you reduce your risk when doing business
over the Internet.
Technology Anti-Fraud
and Security
Here are some issues to be aware of with your online
transactions…
- Use of a firewall
- Keeping security patches up-to-date
- Encrypting all stored and transmitted
data
- Avoiding repeating, forwarding
or sending credit card, payment or order information
via e-mail
- The host servers use and regularly
update anti-virus software
- The system requires unique
IDs to everyone with access to data
- Access is tracked by ID
- Avoid using default settings
for passwords
- Security systems are tested
periodically
- Be sure to restrict employee
access to sensitive data to a need-to-know basis.
It is expected
that the above security initiatives may reduce Internet
transaction disputes by up to 50%.
Additional
Steps to Implement when Applicable:
Shipping only to the billing address however, is one
of the most effective methods of stopping fraud. This
strategy will lose you orders though, and it's a case
of weighing up the potential losses due to fraud against
the loss of business by restricting delivery options.
Restrict
Acceptable Email Address
All your orders should be confirmed by email. There
is a school of thought that you should refuse to accept
orders that give email addresses from any of the free
email services. This sounds pretty draconian, but it
apparently is a very effective strategy. If you are
being hit by a lot of fraudulent transactions this may
be worth considering.
Contact
by Telephone.
You should ask for a contact phone number with each
order, If you are at all suspicious about an order,
a simple phone call can help enormously. If the number
is unobtainable, or you cannot confirm the order via
phone, it makes sense to abandon the order.
Investigate
High Value or Suspicious Orders
Most businesses have a familiar pattern of business.
An unusually high value order, or a new customer who
orders a quantity of "in demand" items, should
give rise to suspicion.
Be Careful
with International Orders
Address verification is not usually viable for international
orders, so there is an added element of risk. For high
value orders an international call to the Issuing bank
is probably a sensible precaution. For other orders,
you have to weigh up the financial benefits of accepting
international orders against the possibility of fraud.
There are a number of countries that have a very bad
record for Internet fraud and orders from these countries
are best avoided. Your bank or payment processor should
be able to provide you with a list of high-risk countries.
Be Wary
of New Customers
Common sense dictates that orders from regular customers
are much less of a risk than orders from new customers.
It makes sense therefore to concentrate your anti-fraud
efforts on orders from new customers.
Restrict
Overnight Delivery
Overnight delivery is extremely desirable in terms of
customer satisfaction, however it greatly increases
the chances of fraud. Stolen credit card details are
only useful to fraudsters for a short time. They need
to get their transactions completed and take delivery
of the goods before the fraud is discovered. A good
strategy may be to limit overnight deliveries to the
billing address and to offer longer delivery to alternative
addresses.
Send Order
Confirmation to Billing Address
If you need to offer delivery to alternative addresses
it is worthwhile sending an immediate order confirmation
by post to the billing address. Providing you are not
using overnight or express delivery this will alert
the cardholder to the order and provide an opportunity
to cancel the order if it is fraudulent.
Use a
Little Psychology!
A prominent warning on your site saying that all orders
are examined using the most modern and effective anti-fraud
systems can be effective. It won't impress sophisticated
fraudsters, but it will scare off many kids and opportunistic
thieves who carry out a high proportion of credit card
fraud.
Use Shipping
Charges to Identify Fraudsters
A simple but effective strategy for international orders
is not to specify shipping charges, but to ask that
they contact you by phone or email for details. Fraudsters
like to keep contact to a minimum and will normally
consider this to be too much hassle and go elsewhere.
If they do contact you, and they seem suspicious, you
can always quote an outrageously high shipping cost.
Most genuine customers won't like this. Most fraudsters
won't care.
Fraud prevention
is always a balance between losing money due to fraud
and losing customers due to excessively stringent security.
Very often it's down to trial and error, but even when
you think you've got the balance right, it's important
to keep reviewing your procedures. The nature of the
threat is always changing and it's only by being vigilant
that you can avoid excessive financial losses.
|
