As the owner of a minority owned business, you want to be the trusted partner of each and every one of your customers. You want your online transactions to be smooth and problem free. Credit card fraud throws a major wrench into your plans for a great relationship with your customers. By being seen as the weak link in the chain, you run the risk of losing trust and repeat business when you allow online credit card fraud to occur.
Fraud impacts your bottom line. When you accept transactions from stolen cards or take fraudulent orders, you don’t just anger customers who have been theft victims. You carry the financial loss and are liable in card-not-present situations. Preventing credit card fraud becomes a bottom line issue you can’t afford to ignore if you want to thrive financially.
Last, but not least, repeated instances of fraud do not make the card processing groups your friend. As a merchant, they can drop your firm and leave you without a way to process credit card payments if you have too many fraud attempts.
Naturally, not all instances of credit card fraud are preventable, and there are no foolproof systems to totally prevent them. Credit card processing groups can have their databases compromised, and you can’t do much about that other than participate in the apologies. However, there are a number of things you can do to prevent online credit card fraud and ensure that your business is not associated with credit card processing problems.
#1 – Follow Merchant Processing Rules
One of the easiest ways to limit your liability and prevent credit card fraud is to follow all of the relevant merchant processing rules for the various credit cards. This includes treating every transaction as a new transaction instead of saving customer card data. Participate in fraud registration services to spread the word about risks. Keep your systems updated to accommodate the newest anti-fraud programs whenever possible.
#2 – Require Card Verification Method (CVM) Numbers
All major credit cards now include card verification methods (CVM) on the back of the card. These are the three to four digit security codes printed on the back of credit cards but not included on credit card receipts or in the magnetic strip. Requiring these numbers can reduce charge backs significantly. Visa, for example, states that using these numbers can reduce fraud by up to 26 percent.
The reason requiring these numbers is effective is that most credit card numbers are stolen in very old fashioned ways. Thieves may have a copy of the front of the card or the magnetic strip information from a hand-held skimmer used in a restaurant or brick-and-mortar retail location. Since they don’t have the physical card, they don’t have the numbers on the back of the card. Even if you have no means in your system to verify the number entered in the CVM blank, thieves don’t know that. Requiring the number to be entered in order to finalize an order lets would-be fraudsters know that they won’t be able to complete their transactions, encouraging them to take their stolen numbers elsewhere.
#3 – Use Real-Time Verification Systems
If your business has the deeper pockets (or larger losses) to justify the increased processing costs, real-time verification systems are another way to prevent credit card fraud online. These systems can include participation in the Verified by Visa or MasterCard SecureCard programs, or they may simply do an instant check to ensure that the card has not been reported lost or stolen. Either way, they provide another layer of verification for your purchasing process.
#4 – Keep Historical Files
Some processing systems allow you to build up historical files of positive or negative customer history. You will be able to see that a customer has successfully purchased multiple items in the past, making them a safe bet for acceptance. By the same token, the system can red flag customers or card types that have a history of returns, fraud reports, and so on. This can let you put th in special category for repeat attempts from known bad accounts, or may require those accounts to complete additional levels of security to place an order.
In some areas, you may be able to link into established files for other businesses in your area or industry, letting your business benefit from the experiences of others without having to pay the full cost of those experienem ces yourself. This link to an experienced group can be especially valuable for AVM enterprise’s who are smaller or newer in the market. Not only does it send the right signals to card processing groups that you are serious about fraud prevention, but it also puts you in a community of equally concerned merchants who work to protect each member from fraud.
#5 – The Trend is a Friend
If your software systems are more advanced, you can use trend analysis to your advantage. For example, do all of your fraudulent online transactions occur between 7–9 p.m.? Do they come from certain regions? Specific email or IP address families? You can look at the patterns and have red flags or barriers in place to block orders placed from certain areas or at certain times, or require customers from those red flag areas to call in to place their orders or finalize their shipping details. While this can slow the order process, it can also help your business save time and money by preventing the most likely instances of credit card fraud.
The tips above are just a few of the biggest things you can do to protect yourself and your bottom line. As a minority business, the stakes are often that much higher for you to be a success in the marketplace. Being a success means ensuring every aspect of your business is doing as well as it can. Preventing credit card fraud online can boost your revenues and increase your customers’ trust in you to do the right thing. With more money staying in your business and a better reputation in your market, preventing credit card fraud could just be the difference maker your business needs now.