Credit Card Fraud Detection for Online Business Owner

First of all, pardon me for posting something unusual today. I just feel the need to share this with other business owners who may find the information useful.

(photo for illustration only)

Last week marked a record of the most credit card fraud transactions we ever got in a weekend.  It makes me wonder how many stolen credit cards out there are used for credit card fraud.  And how much money the businesses have to lose.

Before we go further, what I mean with credit card fraud transaction is when a buyer, with stolen credit card information,  place an unauthorized order without the knowing from the original credit card holder. I will discuss tips especially about online credit card fraud.

Business owners need to distinguish fraud transactions among the legitimate ones. It’s even more difficult if you have an online store as you can’t see the physical card. So what you can do?

My tips are:

  1. Don’t assume just because you never have one fraud, you won’t have one. The more popular your store is, the higher probability you will frauds.
  2. Don’t assume the credit card or the shopping cart system you have is safe. You need to be vigilant and to look through all of your orders and know which ones are the bad ones.

Credit Card Fraud Detection

You need to detect credit card frauds by looking for the characteristics below:

1. Order is unusual

Unusual means different than regular orders you receive daily. For example, the quantity per item is high or the total order is significantly higher than usual. It should give you an alert.

Don’t feel too happy yet when you see an order with a high amount. Take a deep look into. Search on the internet to find more information.

2. Shipping and billing address is different

If there’s an order with a high total order amount with different shipping billing address, I will cancel it right away. Most often, it’s fraud. Don’t feel bad to cancel it. It’s better to be safe than sorry.

3. Shipping with Express mail. 

The thief usually wants to have the goods shipped right away to their place. They don’t care how much the shipping cost since it’s somebody else’s card anyway.

More Ways to be Safe

1. Enable AVS on your online store. Address verification is helpful to weed out illegal transaction.

2. Most fraud transactions are originally from Russia, USA, and some other countries. Search on the internet for it. And restrict shipping to those. I don’t ship to those countries (I ship to USA of course) now since there are higher risk that the purchase is fraud.

The tips I share with you is only a part from the big picture and it’s just the first step. You will find a lot more by searching on the internet.

Do you have any information you want to share or any experience with credit card fraud? Feel free to share in the comment below. I’d love to know your thoughts. Thank you.


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