Credit card fraud can cost small businesses as much as twice the original amount of the transaction because of lost merchandise, investigations and chargeback fees. Even when the fraud is uncovered, it’s a costly, frustrating and time-consuming situation for merchants, which is why it’s important to do what you can to protect your online business. Here are four ways you can prevent online credit card processing fraud:
1. Secure Your Website
All eCommerce websites require PCI compliance. In addition, your system should also have a firewall, cryptography tools and antivirus software. As part of your PCI compliance, you should check with your processor to verify that Transport Layer Security (TLS) 1.1, or preferably TLS 1.2, replaces Secure Socket Layer (SSL) and early TLS (1.0) security protocols. Although the deadline for this requirement has been extended to June 2018, the PCI Security Council urges updating as quickly as possible to prevent data breaches due to known vulnerabilities that cannot be patched.
Install updates immediately. When your shopping cart or website software has an update, install it that day; this is important because these patches often contain security updates.
Of course, it goes without saying that you should use a reputable credit card processing company. You can find some of the best eCommerce credit card processors in our reviews.
2. Secure the Sale
Require all customers to create an account. Rather than having a guest checkout option, require all shoppers to register with your site and provide basic contact and shipping information such as address, email and phone number. Not only can this discourage thieves who are loathe to make an account, but it may also catch those who unwittingly try to purchase merchandise using a card stolen from a customer who already has an account.
Unless the customer is a trusted customer, don’t ship merchandise anywhere except to the address on the account unless you’ve manually verified the purchase.
3. Fraud Check All Transactions
Invest in automated screening. There are several programs that screen transactions for potential fraud. Check out Kount, LexisNexis and ThreatMetrix, or see if your shopping cart software has a built-in screening program.
Set up your own red flags. You know your business and what type of orders are out of the ordinary. Set your eCommerce program to flag these orders for you. Then, either deny the sale or set it aside for manual fulfillment so an employee can verify the authenticity of the transaction. Here are some common things to look for:
- Too many tries with wrong information. Thieves often only have the credit cards or just the numbers. Thus, they have to guess at zip codes and other verification information.
- Abnormally high purchase amount. Thieves often make large purchases in order to maximize profits. You could flag amounts higher than a certain percentage of the average order or higher than a specific dollar amount.
- Orders from a random IP, especially one that does not belong to the country’s shipping address.
- Multiple orders from the same card or for a card that has had declined transactions.
4. Enact Policies That Promote Security
Secure your eCommerce program by limiting administrative control using passwords. Not only does this help stop hackers, but it discourages employee fraud.
Have a secure backup system in place and back up your information regularly. By the same token, do not store more sensitive customer data than is necessary.
Train employees to recognize fraudulent orders. In addition to the flags noted above, these could include invalid phone numbers, international orders, rush orders or unusual requests. Teach your employees what orders are normal for your company and what’s beyond the range of accepted sales tickets.
Also teach your employees to recognize when something is amiss with a standard customer profile. Do your customers order gifts? If so, a different address might not be unusual, as opposed to if your customers usually order for personal use, which would be shipped to their homes. Another example could be sizes: a customer who has normally ordered clothes in a size 4 should set off some alarms if she orders expensive dresses in size 14.
Preventing Ecommerce Fraud is Your Responsibility
Today’s technology can help make credit card purchases more secure, even online, but you need to do your part by using it properly. Even so, clever criminals may circumvent even the latest technology. This is why it’s important that your antifraud efforts utilize the human eye and common sense. You may not be able to prevent credit card fraud 100 percent of the time, but your vigilance can do a lot to protect your online store from fraud.