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Web Based Solutions
10 steps to help prevent chargebacks for
Internet merchants
This article is to help Internet merchants to prevent credit card chargebacks.
Many of these are common sense but they are often overlooked, and review never
hurts.
Always use the AVS and CVV systems for online orders. AVS is
absolutely necessary, for online orders, and if available, CVV should always
be used for online orders. These two methods combined greatly reduce the
chance of a merchant accepting a fraudulent transaction.
Fully investigate any abnormally large orders or large orders
requesting overnight shipping before shipping the product out. Call the
customer to verify their information. Don’t ship any product until you have
spoken to the card holder, and verified their address and personal
information.
If you see that a card had declined several times, verify the order
by calling the purchaser before shipping any product. Call the customer to
verify their information. Don’t ship any product until you have spoken to the
card holder, and verified their address and personal information.
Fully describe your refund and return policies on your website.
This may not prevent a chargeback, but it will help you fight a chargeback.
With a clear refund and return policy on a website, it makes it hard for a
customer to win a chargeback if they are going around your stated policies.
Provide accurate descriptions and images of your products on your
website. By providing accurate descriptions and images on your website,
you can help prevent a chargeback due to a customer ordering the wrong
product.
If your business name does not exactly match the name that appears on
credit card transaction statements, make sure your customers are aware of this.
When a customer reads a credit card statement, if the name of a business does
not sound familiar, then they may do a chargeback for an unauthorized charge.
While, these charges are often won, it is still an inconvenience to the
merchant, that can be avoided.
Be very cautious of any foreign orders, especially if originating
from Nigeria, or Indonesia. The majority of credit card fraud comes from these
countries. While it is not a good practice to turn down orders, we don’t
suggest accepting any order from these countries even if they call in for the
order. A good policy is to accept only a money order, and then wait 9 – 10
days for the money order to clear the bank before sending out any product. Its
not worth the risk.
Be cautious of any order with a foreign shipping address. If it
is a domestic order with a foreign shipping address, it is very likely to be a
fraudulent transaction. We don’t suggest accepting any transaction that
matches this type. Only ship to the card holders address, and investigate the
order before shipping.
Only ship to the billing address, or verify the order if the shipping
address is different for the billing address. Most fraudulent transaction
will have a different shipping address than the billing address. By only
allowing shipping to the billing address, or verifying the order by calling
the customer you can greatly reduce the chance of a processing a fraudulent
transaction.
Do not process any order where a customer is willing to pay more for
the item for no apparent reason, or for an expedited order process. This
is another very common sign of fraud. If the card is stolen, the buyer wants
to get the product as fast as possible, and will pay more for the product or
will pay more for expedited shipping. This will usually come in an offer such
as “What if I pay you more for the product? Can you get it to me faster
then?”. Or, the merchant offers to pay more than the advertised price. Why
would anyone want to pay more than the listed price?
Internet Credit Card Fraud is on the rise, and online merchants have to
protect themselves to avoid excessive charges due to chargeback's and
potentially being shut down. It takes a little extra effort on the merchant's
part, but in the end, the extra attention pays off.
One of the most common scams comes from foreign countries where a person
will order with a stolen card, and have the products delivered to an American
forwarding address. Once the products leave the country, there is little that
a merchant can do to reclaim their lost goods. An unusually large order, or
very uncommon products being ordered can usually classify these orders. Other
signs are an incorrect billing address, or the customer wanting expedited
shipping.
For any suspicious orders, we recommend calling the customer to verify
their information, and possibly requiring a signature and copy of drivers
license on the invoice. This can be easily accomplished through a fax machine,
and while not the perfect solution, it will prevent the majority of fraudulent
transactions. This is a small inconvenience to customers, but it is well worth
the extra effort to prevent fraud. Many customers will be pleased that you are
so adamant in preventing fraud, and will be happy to oblige. Security is your
responsibility, and you are responsible for any fraudulent transaction that
you process.
Copyright © 2005
The Merchant Equipment Store
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