10 Ways to Detect Fraud for Card Not Present Transactions

Posted by Joe Musitano on Jul 30, 2017 11:00:00 AM

Card not present transactions With CNP fraud on the rise since the EMV chargeback liability in the US took effect last year, it's in the best interest of retailers engaging in eCommerce and taking phone orders to increase their focus on securing those transactions. Here are 10 ways to detect and prevent fraud to avoid chargebacks on Card Not Present transactions:

1. Establish a policy, post it clearly on your site and stick to it: Which types of orders and payment methods do you accept? What information do you require to complete an order? If you have a potential customer asking you to altar your policy for a large order, fraud detection alarms should be going off.

2. Be cautious of rush orders: If you have a new client asking for a rush order, and this is not usual practice in your market, approach with caution.

3. Monitor online transactions: Sure, automation is nice and efficient. And if you are processing large amounts of orders per day, necessary.  But if you sell high ticket items that are prone to fraudulent chargebacks, it is wise to monitor your online sales activity. Advanced reporting tools that flag transactions are beneficial.

4. Check that addresses match: If there are different "bill to" and "ship to" addresses, this could possibly be a red flag.  For large suspicious B2C orders, it could be useful to do a reverse white pages look-up that will tell you all the residents that reside at that location, the age, or if the property is vacant.

5. Check the IP address and email: If you have an order from a new client, take a second to look at the IP address and email.  There are web tools that can help with this (View this tutorial). If the billing address is New York, and the shipping address is California, but the IP address is from China,review that order.

6. Be careful with international orders: Use extreme caution when shipping overseas.  Not all international orders are bogus. And depending on your business, could be commonplace.  But there are higher instances of fraud from certain countries in Asia and Africa, and verification can be difficult.

7. Pick up the phone: Again, not realistic in small ticket, high volume sales. But, for chargeback prone transactions, keep in mind that fraudulent buyers will not communicate information over the telephone because it can be traced. Require a phone number and make phone calls on suspicious orders. If there is no answer, no ringing, or an out of service number, look up the number online and see if you find out any more details before processing that order.  

8. Use a Consumer Authentication (3D Secure) solution: Remember, EMV chip cards prevent in-person fraud, but offer little protection for online transactions. To prevent online fraud, merchants should use a Consumer Authentication solution. This verifies that the person conducting the transaction is really the cardholder. Consumer Authentication protects online transactions just like the chips in the chip cards protect POS transactions – it verifies that person using the card is actually the cardholder. It can even be deployed without adding ANY additional steps during the checkout process. This is a huge advancement supported by the major card issuers that eliminates friction at checkout.

9. Signature confirmation on shipping: After an order is placed and you have determined it is not fraudulent to the best of your knowledge, take the extra step and require a signature on delivery. This service can benefit you in the case of a chargeback, especially in the case of so-called friendly fraud, which is when a legitimate cardholder fraudulently claims he/she never received the products they purchased.

10. Work with a trusted payment processor: This is paramount to all of your transactions.  Working with a provider that has chargeback support, Consumer Authentication solutions, and other security enhancements and priorities is the best way to cover all the bases on detecting and preventing fraudulent online sales.

Ask Solupay how our 3D Secure Advanced product can greatly reduce your online fraud and increase your margins.

Download "The Evolution of 3D Secure" Whitepaper

Topics: Card Security