The Top 20 Card-Not-Present Fraud Red Flags
Though credit card fraud is a threat to all merchants, card-not-present (CNP) business models are the most vulnerable. But, as the saying goes, an ounce of prevention is worth a pound of cure. That’s why you need to know all you can about these common “fraud red flags,” as well as actions to take when fraud is suspected.
Credit Card Fraud is On the Rise
Recent studies revealed some troubling information: card-not-present fraud is rising at a drastic rate, especially since the mass adoption of EMV "chip" cards.
47% of merchants believe fraud is inevitable, while 20% think it costs too much to control. Of course, both beliefs are incorrect. Preventing chargebacks caused by card-not-present fraud is vital to protect your bottom line, but you may not really understand how to go about it.
To spot potential credit card fraud, experts have identified specific fraud red flags that may give merchants cause for suspicion. By themselves, none of these warning signs necessarily point to a problem. Large purchases, for example, arenot necessarily signs ofa full-scale fraud issue, but at the same time, it's critical that you recognize the potential events warranting further investigation.
We’ve compiled a list of the most common fraud indicators in the CNP environment. They are grouped by type for easier identification:
Online Ordering Antics
Sometimes the order itself can be a clue to attempted fraud.
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Multiplying Your Problems
It's a tip-off whenever multiple different orders are somehow linked.
Small errors when placing an order raise the likelihood that the customer doesn't have full access to a credit card.
Eyebrow-raising shipping practices could be an omen of attempted fraud.
Tell-Tale Telephone Orders
Some fraud red flags pertain specifically to phone ordering, where the merchant representative communicates directly with the customer.
Learn to Trust Your Instincts, Then Get Help
Sometimes, something about a customer or an order just doesn't feel…right. Above all, you should learn to trust your instincts; if anything smells fishy during a transaction, don't be afraid to request additional information or call to verify the purchase. A little extra due diligence may slow down the process, but a true customer will appreciate the extra protection.
At the same time, none of the things above are absolute indicators of fraud, nor are they the only fraud red flags.
eCommerce technologies are constantly evolving, and criminals are always on the lookout for newer and sneakier ways to commit fraud. Carefully inspecting each transaction for signs of fraud can help reduce chargebacks, but won't eliminate them: a determined criminal can usually find a work-around.
Learning to identify fraud red flags is just the first step towards preventing chargebacks. For maximum protection, fraud detection must be incorporated into a comprehensive, end-to-end chargeback prevention strategy.
It might be time to seek professional help. Let Chargebacks911® help you put a stop to chargebacks from credit card fraud and other sources. Contact us today for a no-obligation ROI analysis.