How To Avoid Holiday Fraud For Merchants
Due to the increased spending that occurs during the holiday season, scammers and thieves anxiously sit behind their computers with clever new ways to take advantage of both consumers and merchants. Since today more and more shopping takes place online, this makes it even easier for thieves to defraud innocent shoppers. The Internet is littered with corrupt websites and malicious advertisements, so it is very important for consumers and merchants to make sure they are on guard. Here are strategies to help merchants better manage their risk this holiday season:
1. Monitor express shipping transactions closely. Fraudsters like when retailers offer express shipping because the faster they receive the goods, the harder it is for retailers to track or recover the merchandise. This means they get their goods purchased fraudulently quickly without the chance of having the products recouped.
2. Consider implementing device intelligence or identification software (also known as digital fingerprinting). Organized fraudsters use technology to make multiple transactions to the same merchant and make it look like they are coming from different IP addresses. With device intelligence software, devices that are used to submit orders can be uniquely identified by combinations of information such as name and type of device, IP address, operating system and the protocol used to transmit data, uncovering the true location of the buyer. Device detection software is also available to monitor mobile platforms as the threat of mobile fraud rises. This is also known as velocity checks, as different systems can reduce the amount the same card is used as card thieves commonly charge a series of small purchases in order to see if the card is still active and available for use.
3. Leverage address verification (AVS) software. These products can help you ensure that the address you are shipping to is valid and the billing address is correct. If the buyer cannot easily validate the corrected address offered, the merchant should raise a red flag. The software can also help reduce the cost of having a shipping company redirect packages.
4. Monitor not only sales and web traffic, but also why credit cards are declined. If there’s an increase in hard declines, especially “pick up” related declines, those transactions need to be monitored and reviewed more carefully. Also look for commonalities between declines. Further investigation often uncovers that these transactions came from a single source and points to fraud.
5. Take the time to match security codes (CVV2 for Visa or CVC2 or MasterCard). These codes help to verify that a customer actually has the card in their possession. Most payments gateways, including the Maverick Gateway, have settings & features to implement rules for this.
6. Keep a list of accounts with a history of fraudulent activity and check new orders against it. Any prior issues with fraudsters should be stored to watch for future trends that are similar.
7. Seek out fraud data. Keep up with publications that report the latest fraud trends as they arise to become familiar with them and make sure your efforts will catch them.
8. Communicate! Open communication channels with banks that provide alerts regarding cards that have been stolen or participate in retail groups or services that share information about fraud they have experienced. The more knowledge a merchant has about the fraud environment, the more powerful they will be in fighting it.
9. Don’t forget the fundamentals. It’s been said that common sense is not so common anymore, so here is a reminder to not forget the basic things to monitor:
- High value orders
- Large quantities on specific items (i.e. electronics)
- Orders with big-ticket items
- International shipping addresses
- Transactions using multiple cards but shipping to a single address
- Multiple transactions on one card but shipping to multiple shipping addresses
- Multiple transactions on one card over a very short period of time
- Live customer service teams should be able to listen to buyers and recognize warning signs such as not knowing their address off the top of their head, not having complete information or trying to get off the phone when faced with requests for more detail.
Contact Maverick today to speak with a Account Executive who can give your specific business type fraud-prevention tips, more detailed ways to mitigate Holiday fraud & potential chargebacks, as well as explain our different programs & software to reduce fraud.