I'm glad that I am not the only one out here seeing an increase in fraudulent charges. A few months ago I typed up here on WPW a very brief list of tips that will help counter and fight against this issue. Since I posted that, we have taken additional measures over and above what is probably needed, but in doing so not only did we reduce dramatically our number of fraudulent charges, we have also gained a strong customer loyalty. There are many countries out there that do not support AVS and there are free tools out there that can be utilized to help protect against US fraudulent orders. I am going to provide here means that we use to help fight this. I am hoping that other merchants will do the same and provide what steps they have taken to help fight this. We have given up with trying to report possible "Code 10's" via the 800 number for Visa and MasterCard due to the last time we called we were suspicious of a transaction due to where the order originated from as indicated by the ip address. When we got someone on the line, after calling the 800 number, we were shocked while trying to explain to the representative of our reason for belief that it was fraudulent that they did not know what an ip address was. We moved on and requested to speak with a supervisor. When the supervisor came on, we asked them if they knew what an ip address was, we were astonished when they had no clue. This is one of the reasons I am responding here. Visa and MasterCard are out to protect customers only and could not give two hoots about the merchants losing money and product, so we had to find other means. I am hoping again that other merchants will join in and tell us what they are doing to fight this growing issue in these hard economic times.
Many gateway providers like Authorize.net offer fraud protection. We have looked into this seriously. We are sure that their protection will help, but using free tools you can go beyond what Authorize offers and protect yourself. Here are a few tactics that we use.
1. As stated not all countries support AVS. To help counter this you may want to add a required field in the cart and request the 800 number that is listed on the back of the card. Most people, if they do not have card in hand, will not be able to get this number and will leave your site if the order is fraudulent. The phone number that you are requesting is the phone number to the bank that issued the card. You can call this number to verify the information provided to you.
2. I stated this before, and I will state it again here as it is one of the most valuable tools in your arsenal. When an order comes in to your email, make sure you log in to your gateway and check to see if there were any failed attempts to purchase before the approval. A red flag ought to be raised if you see 1 or 2 failed attempts prior to the approval. Part two of this is look at the ip address. We use
http://www.geobytes.com/IpLocator.htm?GetLocation to help check this. If you get an order with the billing address in Florida, shipping to California and the ip says it comes from anywhere but Florida or California, you may want to investigate it further.
3. Another free tool "we do have an account though" that is mostly forgotten is the white pages
http://www.whitepages.com/ . We find it very benificial to pluck in the persons name, address, or even do a reverse lookup on phone number to verify. If the person is listed in the white pages, that person has lived at that address for a little while. You can also use the white pages to sometimes obtain the phone number of the card holder at the billing address. You do not want to call the phone number provided to you on your order receipt, but if you are able to get a phone number through the white pages, that is the number you want to call. We have on many occassions contacted people by this means, explain to them why we are calling, stating we wanted to verify that they placed the order. We have gotten nothing but raves from our customers for doing this and found our customer loyalty has gone up dramatically. We have also called customers to verify the order only to have the customer add to the order since they had us on the phone.
4. We have found that most fraudulent orders come from Indonesia and Singapore and have been informed about South Africa but have not seen this. We do not waste our time in shipping to these countries.
We are at this point in time actively pursuing through letters to governors, congressmen, banks, etc. for additional means of verification that is not currently supported. What we are requesting is to be able to ask for the drivers license number and DOB and be able to have the gateway verify this information. Basically to stay within the laws and limitations in asking for this information, this information would be treated the same as the CSV on the back of the card. If you look, if you have Authorize, you will see a field in your receipt for this information, but the system is not in place yet for verification. If you feel as we do that this will help, we urge you to pursue it as we are. Stores ask to see your drivers license at checkout, why can't we? I hope this helps a few people. It does take time to do it, but the rewards may not only be limited to the savings from the chargeback and loss of product, but you might also see your sales increase due to your customer loyalty.