Published on May 11, 2010 Reducing credit card fraud from international orders
No matter how trusting you are, international orders carry a higher risk for potential credit card fraud than domestic orders. That is because an international customer is harder to pursue legally if they do not pay for their goods or use a fraudulent credit card to pay for their goods. There may be language barriers or cultural barriers you would have to overcome to successfully pursue a debt collection or legal action against an international customer.
What can you do to reduce the risk and incidences of fraud?
Use a fraud detection system
A system like Maxmind or eWay Beagle can assess a number of risk factors and produce a risk based score based on those factors. You can then take action depending on the score that is produced and the level of risk assessed by the automated tool. Things like the billing address being in a different country from the buyer, a larger than normal order and request for immediate overnight dispatch or credit cards from known places where fraud occurs frequently are often used as flags for potential fraud.
Ask for photo identification
For international orders, most banks and payment gateway providers recommend additional verification to lower your fraud risk. One way to do this is to ask the buyer to photocopy the front and back of their actual credit card used for the transaction as well as photo ID (e.g. their driver’s license). If they are using a credit card number generator, they won’t have the physical card, which lowers the risk.
Check the billing address and shipping address versus the card bank
If these are majorly different you could be looking at a fraudulent situation. For example, if the card is a UK HSBC credit card with a Indonesian based shipping address and a US based billing address, then it’s a definite red flag that you can use to investigate further.
IP lookup
The physical location of the person who placed the order can help you a lot. You can look up the IP address that was used for the order to work out where the person who placed it was located – was it in a prone-to-fraud country? To do this, take the IP address from your order email, and use a Geo IP tool to look it up (search for Geo IP in Google to find some tools you can use)
If the customer’s IP is behind a hidden third party software bot (called a Proxy) be even more suspicious if any of the above factors are also true because many hack attempts often result through Proxy terms.
Publish your anti-fraud policy
Tell potential customers that you use a fraud scoring system and that international orders will be verified. Will the criminals bother too much if there’s little likelihood that they will succeed in their fraudulent order
Try to contact people you are unsure about
Try to call the customer in their home country. Fraudulent customers will in most cases be less interested in talking to you.
If in doubt, refund
You don’t want a chargeback so if you are in doubt, refund the transaction as soon as you can. What’s a chargeback? That’s when the bank later reverses your transaction (and usually charges you for the priviledge).
No Comments