Fraud Risk: When You Don’t Physically see the Customer’s Credit Card

December 12, 2014

This season, card-not-present (CNP) transactions may be one of your most vulnerable spots. Online and phone order volume is likely to be high, so it’s important to increase your vigilance when it comes to monitoring transactions.

In a CNP environment, the merchant is always at greater risk and card fraud attempts are more common. Obtaining positive address verification and CVV numbers are critical for avoiding chargeback liability. You can also limit your vulnerability to fraud by looking out for the following red flags. While some transactions like these might be legitimate, take time to be sure.

Be wary of the following occurrences:

  • A new customer, especially from out of the area.
  • Multiple card entries for high-dollar orders.
  • Billing and shipping information don’t match.
  • Multiple purchases of the same item.
  • Multiple transactions from a single IP address.
  • Sequences of similar account numbers.
  • One card used for sending shipments to multiple addresses.
  • Several cards used for shipping to a single address.
  • International shipping.
  • Orders from Internet addresses that use free email services, which may not verify the user’s identity.

You can also minimize the risk of these fraudulent incidents by imposing company-wide procedures that include:

  • online mapping of shipping addresses
  • business name searches
  • verbal authorization from issuing banks for any suspicious transactions
  • setting a transaction threshold above which management-level signoff is required

Staying up to date with critical security standard PCI DSS is also key. PCI is essential for maintaining a secure network, protecting cardholder data, implementing a vulnerability management program, and ensuring strong system and data access control measures.

No one wants to lose a sale or spend time fixing a transaction that has been compromised, but this is especially true during the hectic holiday season. Remind staff members to be on the lookout for suspicious transactions and encourage them to slow down with prevention in mind.

Contributed by Veracity Payment Solutions. Through the Michigan Chamber’s partnership with Veracity, you have the opportunity to accept credit, debit and other electronically based transactions at just 0.2% above cost. Email Veracity or call them at 866-944-0055 to learn more.