10 Steps Online Merchants Can Take to Avoid Fraud

December 19, 2018 | High Risk Merchant Account | Jessyka Lee

The eCommerce business has revolutionized the consumer shopping experience. With the internet boom allowing for retailers to sell goods online all aspects of this eCommerce industry are now strategically programed for spikes in customer transactions, like the ever-popular Black Friday or Cyber Monday.

A major issue in the payment processing industry is a lack of communication; there isn’t any distinction in fraud strategies for online retailers versus point-of-sale merchants and the rate of chargeback reports are only increasing.

Payment processing companies need to reach out to internet retailers to accept their merchant account and understand that their business has been looted because of fraudulent actions that payment providers might not insure on a larger internet scale.

Exactly what the payment processing industry does not feature enough of is the repercussions of customer behavior. When the consumer fraudulently participates in favorable fraud – commonly called chargeback fraud – the merchant is then fined and penalized.

Consumers are in fact contributing to the fraud strategy by providing the fake perception that fraud is only credit card fraud established, when in actuality 70 to 80% of chargebacks are filed on account of the consumer implementing fraudulent trades, and no chip or pin will protect against this action.

New tools such as “Chip and Pin Technology” can help particular merchant accounts and ease their payment processing whoas – merchant awareness is key to restructuring online companies.


Here are the top 10 tips that online merchants should follow to accommodate the payment processing demand for “chip and pin technology” and to prevent fraud at all costs.

1. Stick to Best Practices

One of the greatest methods to reduce the danger of fraud would be to adhere to the best business practices. For example, follow regulations and rules implemented by payment systems.

  • Never take an expired card
  • Only process payments once
  • Grant credits and cancellations when a client asks them so credits aren’t actually processed as a fee

2. Identify Potential Fraud

Lowering your risk of fraud implies identifying possible injury. Preventative efforts only go so far, and you have to be in touch with the mindset of fraudsters and the way they will try and attack your business. By way of instance, online merchants should see if fraudsters are creating multiple orders on one credit card but shipping to several distinct addresses; this might be a fraudulent scheme. Furthermore, if fraudsters access an array of credit cards, they will attempt to buy services or products on each of these. For this reason, it’s crucial to watch for a number of cards using the same IP address.

3. Validate Orders

If online merchants grow suspicious of an order, calling the client or sending a letter to their billing address with particular questions only they can answer will help alleviate the stress. Merchants should not reach out to the delivery address given, but rather the charging in case the fraudster is using the shipping address to fraudulently scheme an order.

4. Generate a Blacklist

Online retailers should heavily work with their chip to create a”no-sell” list or otherwise known in the industry as a blacklist. This listing can block fraudulent criminals trying to reduce a merchant’s business.

5. Produce a Whitelist

Continue to support the loyal clients who don’t partake in fraud; create a whitelist that allows for just clients from areas of fraud-free purchases.

6. Use Delivery Confirmation for Larger Ticket Things

Although consumers may find delivery confirmations bothersome, this proposal actually assists the online merchant significantly. Clients cannot use the deceptive angle which their product was never received because the retailer has confirmation of shipping, saving them the risk of a chargeback.

7. Monitor Revenue of Digital Goods

Digital services or goods are huge targets for fraud, and online merchants may then be penalized with a chargeback. Merchants should think about using electronic signatures to validate the customer agrees to the specific stipulations aligned with purchasing the item. Online merchants can even utilize text messaging by sending confirmation codes to clients to be certain their account info is accurate.

8. Fulfill Cancellation Requests of Products or Services Promptly

Online retailers should grant dissatisfied customers of their cancellations or refunds whenever possible. Successful customer support provides a retailer’s company a positive reputation and the client will handle their dissatisfied experience through the company instead of filing a complaint or chargeback with their bank.

9. Use Address Verification Service (AVS)

This automated fraud prevention program will cut the risk for retailers selling in the card-not-present realm. AVS assesses the billing address listed in the trade against any other address filed with the issuing bank. Merchants should ask both billing and shipping addresses of the consumer so that an AVS check can be conducted in front of a trade is processed.

10. Employ the Help of a Risk Management Firm

Merchants should staff with risk management firms so they do not have to spend all of their efforts seeking to prevent or fight fraud. Payment Acceptance Technology can simply progress in 2015, and the industry has to realize that there are layers of safety that has to be implemented to stop fraudulent transactions. There’s a possibility that the U.S. will direct the way in Payment Acceptance Technology, (such as Chip Innovation or EMV) because of already existent fraud prevention tools for both card networks. However, there will not be a stop in online trade fraud unless payment folks work together for better alternatives.

December 19, 2018 | High Risk Merchant Account | Jessyka Lee

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