Credit Card-Not-Present Fraud – A Safety Guide For Merchants
Merchants who accept credit card-not-present transactions are at a higher risk of receiving a fraudulent sale than a card present merchant. Criminals do not have to identify themselves or physically present a credit card to be swiped. Online purchases, phone orders, and catalog sales are examples of when a credit or debit card would be keyed-in, not swiped. These card-not-present merchants must take special precautions to ensure they will not be the next victims of credit card fraud. Here are some things to look for when accepting card-not-present (CNP) transactions.
First Time Shopper
Ecommerce merchants, phone order merchants, and catalog sales merchants should always be wary of first time customers. Criminals are always looking for new victims to scam. Ensure that you are using the AVS, or address verification system, and the card security code (CVV2) to reduce your chances of getting stiffed.
If you receive an order that is larger than normal, or an order that includes a lot of the same item: be suspicious. Using the same card for multiple orders in a short amount of time should also cause an alert. Criminals succeed at credit card fraud by ordering big and fast before a card can be shut down. Criminals also intend to re-sale their stolen goods. The bigger inventory they have, the better chances they have on the street.
Big Ticket Items
Criminals love to use stolen or counterfeit credit cards to obtain big-ticket items. Big- ticket items will have the largest resale value and make them the most profit.
Any time a customer requests “rushed” or overnight delivery take notice. Criminals need to have their stolen goods delivered fast before the card is alerted to authorities and shut down.
International orders are a big red flag because AVS cannot validate addresses outside of the United States. Canada and the United Kingdom are an exception.
Be on the look out for transactions placed on multiple cards with one shipping address. Or, multiple shipping addresses for transactions placed on one card. Unusual shipping could indicate a ring of counterfeit activity.
Similar Account Numbers
Criminals can create counterfeit credit cards using illegal software. Many times these programs create account numbers that are closely related. Take the time to look closely at account numbers and note similarities.
Single IP Address
If you receive transactions from multiple cards from a single IP (Internet Protocol) address, take a closer look. Criminals with stolen or counterfeit credit cards will often “run” them through the same computer.
Free Email Accounts
Fraudsters utilize free email accounts to use in the check out process because there are no records or audit trails leading back to their identity. There is no billing relationship or verification of the person who has opened the email account.
Card-not-present fraud is popular among credit card criminals because their identity is anonymous and they do not physically have to present a credit card to be swiped. The best things a CNP merchant can do to protect themselves is be aware of suspicious orders, utilize the AVS, and always ask for the CVV2 security code. If you are in doubt, you can always ask for an alternative payment.