Verify Your Customers' Addresses
"A criminal will rarely have complete information when using stolen account details to make a fraudulent purchase. The fraudster might have the account number, for example, but will still need to make up a fake address for the billing information. The Address Verification System (or AVS) allows you to match each customer's billing address against the billing information on-file with the cardholder's issuing bank," said Monica Eaton-Cardone, Co-Founder & Chief Operating Officer, Chargebacks911. "Delivery confirmation is another vital tool, as delivery confirmation can be invaluable information in the event a customer claims her package never arrived and files a chargeback."
Flag Orders with Overseas IPs
"The rate of fraudulent activity experienced by US merchants was seven times higher for orders involving an overseas IP compared to domestic purchases. Of course, it's not quite as simple as saying, "only accept domestic orders." Take China, for example; orders originating in China have a high instance of fraud, but China is also an incredibly lucrative consumer market, so you won't want to flat-out ban Chinese buyers," said Eaton-Cardone. "I'd advise you to flag transactions from international IPs, then apply added scrutiny to try and identify any signs of fraudulent activity. You can even conduct manual reviews for these orders on a case-by-case basis if necessary."
Use Geolocation to Reduce False Positives
"While AVS and IP addresses can help identify fraudulent transactions, geolocation can also help verify legitimate ones," said Eaton-Cardone. "Let's say you receive a new order, but the delivery address doesn't match any of the customer billing information on file. Is it fraud? Or is the customer simply on a business trip? Rather than declining the transaction outright, geolocation can help validate the device used."
Challenge Chargebacks Whenever Appropriate
"You should be proactive about chargeback management, rather than accepting disputes as a "cost of doing business." We've found upwards of 80% of chargebacks are attributable to friendly fraud, so there's a clear incentive to engage in tactical representment whenever appropriate. Of course, the representment process can be very complex and time-consuming, which leads many businesses to turn the process over to specialists with the necessary technologies and skillset," said Eaton-Cardone. "I'd also advise you to put together a chargeback "blacklist;" flag orders from customers who've filed a chargeback, and subject these transactions to added scrutiny before accepting the sale."
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