Research suggests that while credit card fraud is a significant problem, it actually affects only a small percentage of online purchases. In fact, it is foolish to apply a “one size fits all” method that has unintended adverse consequences. Therefore, a balance between precaution and practicality must surely be applied.

In another article, I ranted about sellers who insisted on paying pennies into the buyer’s bank as a means of avoiding the use of stolen credit cards. That can be very irritating to the buyer because it implies fraud, but it also delays shipping, one or the other of which could prompt the customer to cancel the order and never return it. For some sellers, anything other than that automated method may be rejected because “it takes too long,” they don’t have the staff to do it,” “it’s not the way we do things here,” etc.

What will be proposed in this article requires more effort, attention to detail and probably a change of mindset. However, the techniques will work to help protect against fraud, without offending and/or losing a valid customer.

Orders that should cause concern

  • Start by reviewing your own “suspicious order” log. (see below) If buyer details appear in those records with details of actions taken, you are well on your way to eliminating a potential problem and can deal with it appropriately.

  • Be careful if the billing and delivery addresses are different. However, there may be perfectly valid reasons, especially if billing is to a PO Box but the merchandise is wanted to a physical address. In this author’s opinion and despite advice from banks, automatic rejection of orders with PO Box number addresses is just another form of customer annoyance, unless a very good explanation for this policy is provided.

  • It should be mandatory for all customer orders to include a contact phone number as well as an email address, so if something seems dodgy, the buyer can be easily called. A lack of connection or a connection to some strange voicemail will be an obvious warning sign. Another method is to use “reverse number” software to see if there is a match. If not, of course check the order. (this solution is available online)

  • Buyers using dubious looking email addresses should be considered fraudulent. Most honest people will have something easily identifiable in their address, ie a personal name or business name. Of course, the seller can and should promptly send a simple message requesting confirmation that the order was placed by that person. Then see if your message bounces or there is no response. If the address refers to a company, it is easy to search for that company on the web. If it is not found, there is reason to be suspicious.

How to make the query

Ask someone with a pleasant manner to telephone the buyer. while the contact could done via email, the personal touch is much more likely to have positive results and provides a much greater opportunity to assess the situation without offending a legitimate buyer.

  • A sensible reason for the inquiry MUST be provided. Any reasonable person will understand if the inquiry is (a) prompt, (b) courteous, (c) devoid of any adverse inference, and NOT implying that an issue applies to this particular customer.

  • A little “white lie” seems perfectly appropriate. Instead of saying something that could be interpreted as an accusation, it would be better to say “we have a problem with our systems and, although it is not your fault, we are unable to process your payment”. “Do you have another card or could you pay by bank transfer?”

  • Any hostile response will raise the “red flag” and allow the seller to reject the order for “technical reasons and with regret”.

  • Always ask for the name of the client’s bank. It is unlikely that someone using a stolen card would know the answer.

  • For high value transactions, request a “verification check” This is a service operated by VISA and Mastercard where the customer has a password authorized by their bank. It requires the buyer to sign up for this, but a legitimate buyer is unlikely to decline.

keep records

Nothing more complicated than a simple EXCEL file (or any other spreadsheet or database) is needed to keep track of suspicious orders. It will take only a minute or two to enter the details. The suggested fields are the following:

The date of the order

name of the buyer

Buyer’s phone number

Buyer’s email address

requested delivery address

ordered item

Credit card number, expiration date and CCV number

Reason given for consultation

Result (order processed OR rejected)

Excel allows you to search any of these fields to make it easy to identify any repeat attempts.

share your concerns

In obvious cases of possible fraud:

  • Report them to your bank. They will have the professional staff to investigate further, also to protect you in case your funds are stolen.

  • Report the matter to the card-issuing company

  • In extreme cases, also report the matter to the police.

Keep reading

This article attempts to offer practical advice from the perspective of retaining honest customers. More information on investigation and prevention techniques can be found on numerous Internet sites.