Implementing AVS is the first step. But letting it run on default settings — without further tweaking and fine-tuning — is often ineffective.
Instead, you need to address the edge cases. For example, should you block a transaction if an AVS check returns a partial match?
I’ll be the first to admit that finding the right balance between security and customer convenience is a delicate art. So, to round out our discussion, let’s talk about some best practices for setting AVS rules. These pointers should help you configure AVS into a system that’s adapted to your business’s unique fraud surface.
You can get more value out of address verification by making risk-based decisions, catering your responses to your industry and product vertical, accounting for diverse practices in different global markets, and considering transaction dollar value when determining how to proceed.
Remember: you shouldn’t determine whether to approve or deny a transaction solely based on an Address Verification Service’s full, partial, or no match outputs.
AVS is an important tool. It just shouldn’t be the only fraud prevention tactic in your arsenal. Instead, you should layer on your own set of rules and complementary fraud prevention initiatives so that you can get the most out of your AVS checks. Specifically:
Make Risk-Based Decisions
AVS response codes can provide information about a transaction’s possibility of risk, but you still need to decide what to do with that information. For example, you can set rules to automatically flag all “No Match” (Code N) responses for review, but approve partial matches (Codes A, W, and Z) conditionally based on other variables.
During manual review, you can consider other factors like whether the CVV matches, the size of the order, and the customer’s purchase history to make a more informed decision. This allows you to follow a flexible, risk-based approach instead of relying on rigid, one-size-fits-all rules.
Consider Industry-Specific Differences
Your AVS strategy should be tailored to your specific industry. If you’re in a high-risk vertical or have a low tolerance for risk, then you may want to err on the side of declining potentially fraudulent transactions. This means rejecting most purchases that return partial and no match results.
By contrast, if you’re in a low-risk vertical or have a higher tolerance for risk, accepting some partial matches may be more important than preventing every chargeback. In this case, you may feel comfortable approving more partial matches without conducting any manual review.
Prioritize Customer Service
Providing clear and timely communication to customers can drastically reduce the likelihood of chargebacks by heading off issues before they become disputes. This includes responding promptly to customer inquiries, proactively addressing potential issues, and providing clear and easy-to-understand information about transactions.
Set Transaction Thresholds
Not all transactions carry the same level of risk, so your AVS rules shouldn’t treat them all the same. Consider setting transaction value thresholds to apply different rules based on the order amount.
For example, for a small, low-value purchase, you might be willing to automatically approve a partial AVS match to avoid checkout friction for a legitimate customer. However, for a high-value order that exceeds a certain threshold (e.g. $500), you would enforce stricter AVS requirements by demanding a full match and flagging any partial mismatches for an immediate manual review. Doing so allows you to intelligently shift your risk decisions based on the amount at stake.
Double-Up Fraud Protections
Using a combination of fraud tools in tandem can help you detect and prevent fraud in real time. Pairing AVS with tools like card verification value (CVV), plus behavioral analysis tools like fraud scoring, can give you a comprehensive view of transactions and help you detect fraudulent activity. The more hoops fraudsters have to jump through, the better.
Account for Geographic Factors
AVS is not supported by many banks outside of the US, Canada, and the UK. So, if you have a significant international customer base, you should configure your rules to bypass “AVS not supported” codes (like Codes S or U).
Instead, you can lean more heavily on other fraud indicators, such as CVV data, geolocation information, and customer order history to assess the transaction’s risk.
Ask for Help When Needed
Professional assistance can give you access to a range of tools and techniques to help stop fraud. A good service provider can also offer valuable insights into industry trends and best practices, and help you parse data generated by past incidents to understand the root causes of fraud and chargebacks.
