Keep a close eye
Fraudulent orders typically have similar
characteristics. They tend to use free email addresses (like Yahoo, Google,
Hotmail), a mobile phone number and the most expensive shipping method. They
generally have a large order value and often there is no history of orders from
the customer. They also have different delivery and invoice addresses. However,
many genuine orders are bought as gifts and sent direct to the recipient, which
complicates the problem.
Stay on guard
Fraud usually involves small high value
goods that are easy to resell, but nothing is sacrosanct. A friend of mine
received several small orders for Bibles, each of which was paid for. Then they
received a large order, which unfortunately turned out to be fraudulent. It is
easier for a fraudster to shift a larger quantity of the same product than
small quantities of different ones.
One retailer, who sells model railway products online, had never experienced fraud and didn't worry about it. Then he received several fraudulent orders in one day, and lost £3,000. In proportion to his sales and margin, this was a big loss. Unfortunately these examples are not uncommon. Fraudsters will take maximum advantage while the merchant's guard is down.
Fight back
When you suspect an order is fraudulent,
contact the buyer. Most crooks will avoid a dialogue with their intended
victim, as it increases the risk. If you believe a transaction is fraudulent,
void it or refund the payment. Don't wait for a chargeback because the bank
imposes penalties and tracks how many you receive.
How banks can help
Unfortunately, merchants carry the can for
fraud. Your bank won't investigate individual instances, and experience with
the police is patchy.
The weapons your bank does provide include CV2 (the three digits from the back of the card); address verification (AVS); 3D Secure (including Verified by Visa and Mastercard SecureCode) and the Payment Card Industry Data Security Standard (PCI DSS).
3D Secure is like Chip and Pin (C&P) on the web. Buyers are prompted for their password when they use their card online. C&P has reduced fraud on the high street, but increased the problem online, so expect the banks to push 3D Secure much harder. They are so confident in it that they relieve the merchant of the risk when it is used.
Unfortunately few cardholders have enrolled in 3D Secure and some who were presented with it even thought it was a scam. Enforcing 3D Secure used to be the kiss of death to an order, but fortunately this seems to be changing.
Using online fraud services
Companies like the 3rd Man can help
sellers, because as well as screening individual transactions, they can check
multiple transactions from multiple merchants for possible fraud. The 3rd Man
claims to detect the vast majority of fraud attempts.
In the pressure to fulfill orders the key is to stay watchful. Through using a combination of traditional protection and third-party services, the risk of online fraud can be minimised. Remember, fraudsters will seek out the softest targets so make sure you're not one.
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