Reducing Fraud

Fraud is a concern that all business owners have and something that needs to be proactively prevented. Credit card fraud is rampant in today's world and business owners have to be careful when placing transactions. There are several ways to avoid fraudulent credit card activity: with Address Verification System (AVS), being aware of the signs of fraud, verifying the CVV2 or CVC2 code, and confirming large orders over the phone.

By verifying the cardholder's billing address with the card issuer, a gateway system with the AVS feature is most beneficial to reducing fraud. AVS must be used on all keyed transactions or your business will automatically be downgraded to a non-qualified rate, which can end up costing you more.

Making sure salespeople and yourself are aware of the signs of fraud is very important. Some signs to look out for are: larger dollar amounts than normal orders, orders with several quantities of the same item, orders made up of high priced items, orders placed on rush or overnight delivery, orders using free email service providers such as Yahoo or Hotmail, orders shipped to the same address but used multiple cards, international shipping, multiple purchases in a short time period, and the ship to and billing addresses are not the same.

Another way you can reduce the risk of fraud is by verifying the three digit CVV2 or CVC2 code on the credit card. Visa and MasterCard enabled this security device to ensure that fraudulent activity was avoided. The code tells you that the cardholder has the card in his or her possession and the account is legitimate. American Express has a four digit code.

Finally, in order to avoid fraudulent activity, confirm large orders over the phone. You just simply have to call the customer and verify that he or she placed the order.

Overall, you want to avoid fraudulent credit card transactions. They can cost you big money in the end because of charge back fees and loss of products and/or services. Charge back fees are the fees merchant accounts charge when an item is found to be purchased under fraudulent activity or when a customer disputes a charge. The fee can cost you up to $30 per transaction. That is not acceptable. Your business will surely lose money if you allow this to happen.

Be sure to follow these techniques and you can be rest assured that you've done your best to prevent fraud. Doing one alone is not enough. You must combine all techniques to have a proper and thorough fraudulent credit card activity preventer.

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