We explore three common types of online criminal activity and what your business can do to help prevent fraud.
Since physical cards are not swiped during online purchases and there is no face-to-face interaction, clever fraudsters have even more opportunities to exploit stolen card information. Let’s explore three common types of online criminal activity and how your business can prevent fraud.
1. Simple Card Theft
When thieves acquire credit card information, such as account numbers, expiration dates, and cardholder names, it can lead to online payment fraud.
Here are steps your business can take to help prevent the effects of simple card theft:
- Implement an address verification service (AVS) and request card security codes to help confirm that the buyer is indeed the cardholder.
- Flag orders with unusually large quantities or transaction values.
- Monitor payment card numbers, IP addresses, and email addresses associated with known fraudulent transactions.
2. Card Testing
Fraudsters with a bulk of stolen credit and debit card information often “test” each card with small transactions at trusted businesses to identify which ones have not yet been reported to issuers.
Steps to help mitigate these attacks:
- Incorporate AVS and card security code verification into your checkout process to slow down payment transactions, making your site a less attractive target.
- Monitor device, IP address, and geolocation velocity to flag unusual purchasing activity that exceeds a predefined threshold.
- Identify each buyer’s device and actual IP address, even if they are using a web proxy.
3. Package Interception and Redirection
Card thieves may use stolen card information to purchase and intercept goods during delivery. To mitigate the costs of lost goods, chargebacks, and refunds, consider these techniques:
- Flag potentially risky orders for manual review before shipment and contact cardholders directly to verify the order’s authenticity.
- Require customers to provide their billing address when accepting payment. Once confirmed, use it to cross-check the shipping address.
- Implement a velocity check on each shipping address and flag any that exceed your predefined limit.
Your payment processor can assist with these methods and offer guidance on additional actions to protect your business. There are various strategies you can implement.
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