Ways,Reduce,Chargebacks,amp,Fr ecommerce 10 Ways to Reduce Chargebacks & Fraud

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Merchant concern about online credit card fraud andchargebacks is rising at a significant rate. According to the2001 Online Fraud Report, conducted by Mindwave Research, itrevealed that, "41% of merchants say the issue of onlinecredit card fraud is 'very serious' to their business." As e-commerce continues to flourish the number of instances ofcredit card fraud and chargebacks will continue to mounthigher. It should go without saying that the need to takecertain measures to reduce and virtually eliminatechargebacks and fraud is certainly paramount.Here are some ways you can greatly reduce the instances ofchargebacks and fraud, even potentially eliminate the riskaltogether:#10 Interactive Voice Response (IVR) TerminalsIVR Terminals, developed by VoiceStampshttp://www.voicestamps.com, are a relatively new solutionthat greatly reduces chargebacks and fraud by collecting a"voice stamp" or voice authorization and verification from thecustomer before the merchant ships the order. The voicerecorded order verification is then automatically e-mailed tothe merchant for filing in the event the customer tries todispute the charge on their account.#9 Collect CVC2 and CVV2 Verification NumbersThis tactic alone can not only reduce instances of chargebacksby 26%, according to Visa, but also reduce any pass-throughfees that may be charged when a credit card order isconducted. On the back of MasterCard, most Visa andDiscover credit cards is a 3-digit security code located rightafter your credit card number. Requiring customers to give the3-digit code acts as an additional verification measure.American Express cards also have a similar security code thatis located on the front of the card right above the cardholder'saccount number and is usually 4-digits long. Most onlinepayment processors support entering the security codes whenprocessing credit card orders. Check with your paymentgateway provider (i.e. Verisign, Authorize.Net, ECHO Inc., etc)for details.#8 Use Address Verification System (AVS)AVS checks to ensure the address entered on the order formmatches the address to where the cardholder's billingstatements are mailed to. People ordering products and/orservices using a stolen card number will never use the realcardholder's billing address, so this is your chance to stop theorder before it's too late. AVS only works with ordersconducted in the US. Failure to use AVS when processingcredit card transactions will always result in paying highercredit card processing fees.#7 Scrutinize orders from developing foreign countriesA large percentage of fraudulent Internet purchases are madefrom Indonesia, Russia, and other eastern block or developingcountries. Accept orders from such countries at your own riskuntil a worldwide AVS system is developed.#6 Let customers know what name will appear on statementsMany merchants who use 3rd Party Processing companies haverun into problems because the company name that appears oncardholder's monthly statements is usually the name of the3rd party processing company and not the company name ofthe site the cardholder made their purchase from. This isn'talways the case, but in many cases it is. If you use a 3rdparty processor, and even if you don't, make sure thecustomer knows what name will appear on their credit cardstatement at the end of the month. This will help to reduceany confusion that might would otherwise occur.#5 Handle suspicious orders accordinglyIf an order seems suspicious the best way to handle thesituation is to either call or e-mail the customer and attemptto verify that they placed the order. As a rule of thumb, if indoubt, check things out. It may be a good idea that if acustomer makes an unusually large volume purchase from yoursite to follow-up with a verification call. This is where asystem like IVR terminals, previously mentioned above, cancome in very handy.#4 Watch out for orders using free e-mail addressesBe wary of accepting orders from people who used a free e-mail address when ordering (i.e. Hotmail, Yahoo, etc.).Tracking people who used a free e-mail address is almostimpossible, it's much easier for them to get away then if theyused their Internet Service Provider (ISP) or their owncompany web site e-mail address. To check whether an e-mail address is a freebie or not just take the part of theaddress after the "@" symbol, add "www" to the front of it andsee what website it brings up (i.e. [email protected] =www.yahoo.com#3 Signatures on deliveryIf your business delivers products use a carrier that requires asignature on delivery, and allows you to have a copy of thesignature. Retain these for your records.#2 Request fax copies of ID and credit cardYou may want to request your customer to fax a copy of bothsides of their credit card and driver's license. This tacticusually works best in a B-to-B (business to business) salesenvironment. While this is not a defense under Visa orMasterCard rules, it is yet another way to deter fraud.#1 Posting a warning messageTaking the time to post a warning message on your orderpage to those who may attempt to make a fraudulent orderwill greatly deter the number of instances of fraud. Be sure tomention that IP (Internet Protocol) addresses are beinglogged. IP addresses can come in handy when locating peopleabout fraudulent orders.Taking measures to deter and eliminate fraud and chargebacksfrom occurring are a necessity in order to operate a successfulonline business. Each day companies dedicated to riskmanagement are developing solutions to provide merchants,like yourself, with extra protection because of the financialburdens chargebacks and fraud can bestow if ignored. Article Tags: Credit Card, Card Fraud, Orders From, Free E-mail, E-mail Address