Being an ecommerce business comes with its own set of unique challenges. For one, it’s very difficult to validate a real customer, and you can also face a lot of issues that come with unauthorized transactions—such as resulting chargebacks, which can cause even more financial loss.
Receiving a fraud chargeback notification can feel like a punch to the gut. And since credit card companies have put the onus on online merchants to ensure that orders have been placed by cardholders, it is incumbent on them to educate themselves on how to spot fraudulent transactions.
Here are seven tips that can help you detect online fraud:
Use Address Verification Service (AVS)
Address Verification Service is an automated fraud prevention system designed to reduce the risk of fraudulent transactions. AVS compares the billing address supplied by the customer when they checkout to the address the issuing bank has on file. An AVS mismatch may be a sign of fraud, since the criminal might have limited access to the cardholder’s personal information and be unable to provide an exact match. While an AVS mismatch does not guarantee an order is fraudulent, it is an indicator that you need to take a better look at the other risk factors on the order.
Location, Location, Location
The transactions that are the most secure are those where the shipping address, billing address and IP address are all very close to each other. Transactions that show long distances between these different addresses should be scrutinized more carefully.