Fraud is everyone's worst nightmare. Check out these sevent tips to prevent ecommerce fraud.
The cost of fighting fraud has eCommerce merchants in a battle and losing revenue. The highest cost is the 500% growth rate of chargebacks. Another loss is abandoned carts, which may be due to outdated fraud detection tools unnecessarily kicking shoppers out when their purchases don't meet certain criteria.
Having an advanced fraud prevention tool is a sound defense. We will share seven tips for preventing fraud when the card is not present.
1. Monitor Repeat Customer Behavior
If you have a repeat customer who always places similar orders and there is a sudden deviation, you may want to take extra steps to validate the transaction. One way is to place a telephone call to the customer. However, if you're processing hundreds of orders this can be inefficient and costly.
To mitigate this problem, ensure you leverage a Mod 10 algorithm that verifies card numbers before submitting them for authorization. Using this algorithm, if the card fails to pass the test, the customer receives a message indicating their card is invalid and to try again.
2. Verify Transaction Information
If an order is flagged as risky, before you ship the order, you may want to call the phone number on the order to verify the transaction information.
Criminals are intent on maxing out cards before their theft is detected. They do not maintain records and may not be able to confirm transaction details. Once again this type of manual fraud verification is not efficient and extremely time consuming for large volume of digital transactions.
3. Monitor Priority Shipping Usage
Priority shipments are expensive, but criminals don't care. They want to get the order shipped and goods in their hands before the theft is discovered. If a customer bypasses a free shipping offer and opts for expensive fast-ship options, that may be a clue of eCommerce fraud.
Flagging expensive shipping options for verification is one way of preventing fraud. The fastest way to receive a package weighing up to 150 lbs. is FedEx's next-day service. It is also more expensive than other options, with 3-day express starting at $17.82 and overnight at $29.05 or more.
4. Leverage Address Verification Service (AVS) and Security Codes
An Address Verification Service is an automated system that can prevent fraudulent transactions. When purchasing, it compares the customer's address with the address on issuing bank records. If the addresses differ, it indicates the transaction may be fraudulent.
The three-digit number on the back of a Visa, MasterCard, or Discover and the 4-digit number on the front of American Express verify that the person making the transaction has physical possession of the card.
5. Review Location and Shipping Destinations
If the billing address, shipping address, and IP address are all within close proximity, they are probably legitimate. If there is a long distance between those addresses, you need to look closely at the transaction.
Those committing fraud will order products shipped to locations other than the billing address. If the destination is to a business such as a re-shipper or freight forwarding company, that is a definite red flag.
6. Flag Repeat Failed Purchases
One of the types of fraud that sends up red flags is a customer making several failed purchase attempts with different card numbers. The thief has a list of stolen cards they are trying to max out.
Once a fraudulent transaction succeeds, the perpetrator will make other attempts. Make sure you blacklist the fraudulent party's IP address, phone number, email, and billing address to prevent further transaction approvals.
7. Implement Security Protection
Implementing advanced fraud prevention solution is no longer a nice to have option with the rapidly growing CNP fraud. The right solution will help you increase legitimate transaction approvals while eliminating fraud. The result is an increase in your revenue as well as brand reputation protection.
Vesta fraud solutions are nominated for the best antifraud-managed solution in 2022.
The Vesta Payment Guarantee solution comes with a 100% chargeback protection guarantee. If Vesta's protection system allows a fraudulent transaction to get through, we will absorb the total cost. This takes your business cost for fraud to zero, leaving you with only profitable transactions.
Your Fraud Prevention Defense
Are you ready to establish your payment fraud prevention defense? Vesta will help you set up a fraud prevention platform for eCommerce transactions to maximize your revenue, simplify friction-free checkout, and eliminate CNP fraud.
How confident are we in our product? We assume 100% of the cost for any fraudulent online transactions we approve, dropping your fraud cost to zero.
Request a free consultation and demo today.