credit card fraud - how do you handle these?

Most of my competitors don't ship outside of the US and Canada. I have been doing it - but it's risky. Lots of credit card fraud.

I use Verisign's address verification and CSC matching but still some bad transactions get through. A few times, for large orders, I have called the credit card bank to confirm that the card has a clean record - this has saved me some losses but it's a huge pain in the *** and the credit card banks are not very cooperative. Does anyone have any tips for finding out who to call at the cc banks and getting through to a cooparative employee?

Also, do you follow any standard precautions when you get a $400 order from another country? What do you do if that person orders on Monday and then again on Friday?

Thanks for any experience or advice you can share.

We only ship within the US, Canada due to the risks involved.

Even without the risks, we stopped shipping to most of the other countries because they do not understand that they have to pay customs and sometimes don't want to pay the taxes that their governments want. So they just refuse the package and issue a chargeback, which screws us anyways.

For the questionable orders, we would call the customer (if it's the wrong number we're pretty sure that it's a fraud and cancel the order) and ask for the bank phone number. And if it's a huge order, we would ask them to fax over their driver's license and credit card number over to us.

When calling the banks, we would tell the phone rep that we are a company and want to verify the address associated with the credit card number. The only information that they are allowed to give is if it matches or not. If it matches, great, if not, call back the customer and let them know. They might've just moved or something, call the bank again with the old address to verify.

We would also go to the internet white pages (like http://www.anywho.com ) and do a search for their last name with city and state. Most of the time the address, phone number will match the name. If it doesn't, we cancel it.

For outsite the US, I haven't found a white pages. Still looking, but since we stopped shipping international, it's not that high on the priority for us anymore.

I get very worried if the person would immediately place another order right after receiving the first order.

You probably know this, and I hope no one takes offense, from our experience, 99.9999999999% of the orders from Nigeria, Singapore, Indonesia, and some of eastern Europe are fraud.

The only advice I can give you on International, is that after 4 years of online business, we have limited it down and still doing fine. It's harder to track lost packages internationally, it's harder to verify credit cards internationally, and harder to have a collections agency succeed in getting your money back internationally. And I'm assumming that your profit margins are still the same for this extra headache.

My .02

(I'll write more when I have time. )

Wow! That is some top info, kllrwlf... a real guide to covering your wallet. :-P

I hope lots of people who do shipping read your reply as you have lots of experience and some great ways to lower your risks.

I really appreciate such a detailed response. Thanks!

I've just taken off the credit card payment from our site because 2CO, who process the cards, couldn't offer us any protection against Nigerian Fraud. I'm sure everyones heard of this, they're a real pain in the backside. I removed Nigeria and a load of other "trouble" countries from our shipping, but then they just started using fake US addresses. I didn't want to get hit with the charge backs so I just removed it until we can find something better, and hope that PayPal won't put too many people off.

What I do is not process the charge it only cost you .25 for the order till you can get the information verified. I have been having one guy form syngapore charge order after order. I was blocking his IP but he has been getting IP's at will so now I ignore him. Make all international orders fax or email proof of idenity, be sure and provide this in the shiooing policy http://www.keysupplements.com/shipping1.htm if after emailing them and this is not provided forget it fraud. Also check were the card is from, your card processor will tell you, and order from another country won't have an americian card, I am not sure how you process your cards but we are issued an approval and then we check the order and run the card, if it is fishy we check the card first before we run it. One the charge has been batched out and you find out the card is bad a refund cost twice what it takes to process it and a chargeback is even worse. Never run the charge till you are sure if it is good. I have all but quit international orders they are just a big pain. I continue to have it available only because I have customers from other countries been ordering for awhile. My stance is if they want the products they provide the correct information or forget it.....

Yes, I have experienced that a lot of Eastern European countries (Romania & Russia in particular), Nigeria, Indonesia and also from here the U.S. bring A LOT of fraud. Even with AVS (Address Verification Systems) and CVV2 security features a lot of the orders get through if this information is correct. One way I have found to disrupt this is to just ship to the Billing address of the card; but even this at times is risky especially on large orders, because at times I've had fraudsters change the billing address of the card, because they had online access to the bank account.
Every company ONLINE suffers from credit-card fraud. The counter-measures are very hard to implement, because when you think you're when step ahead of them, they are two ahead of you.
My advice just watch out for LARGE orders ($500-???), contact the customers of these orders and verify if they've placed the order themselves.

Another thing that you can use are Collection Agencies. They usually only charge if there are successful which is 40% of the amount. If they are not successful, you are not charged.

Out of 10 that we've sent to the Collection Agency, we had 1 "customer" send back the "lost" item stating that she just found it.

I know 1 out of 10 doesn't seem like much. The fact that I know that they are getting annoying letters and bothered is worth the money that we lost. If we get money back, we consider it as a bonus.

Also, beware of customers demanding you ship their order expressed, or overnighted. Or have the package left at the door if no one is home.

I understand, that as a customer, the convience of the package being there when you get home instead of having to drive to UPS to pick it up. And there are times that we will do this for a customer. But there are times packages get "lost".

If it's a large order and everything matches (AVS and CVV), and it's doesn't look good, we would have adult signature required (we use UPS for our shipping). This requires the UPS driver to check the driver's license with the package to verify everything for us. An extra step, an extra buck, but gives a slightly better feeling of sending off huge orders.

People placing huge orders with free email accounts. I personally have a Hotmail account. It's just another flag that we have when checking each order.

When checking the orders, doing a quick scan of the address might save you some headaches.

We once had an order from
John Henderson (fake name, but you get the idea)
3131 Lagos
Lagos-Nigeria NY 01323
USA

You see the problem. Some of these a$$ uses the city for the city and country, just in case you have the countries removed.

Best defense is the phone. Calling them gives you more benefits then not. It makes the customer feels that you are taking personal attention to their order, when in fact you are just verifing everything to cover your own.

Only two advices for the phone. Make the customer feel that it's for their own safety and not yours when making the call. Be very discreet about the order. It might be a gift.

Keep track of everything, especially the tracking number into your database to prove that you did ship it to the billing address with the corrent AVS:YYY. This will help with any chargebacks... which is another story.

One of the things we did that virtually eliminated all fraud on our US orders was to stop shipping via the USPS and started to ship everything UPS or Airborne Express. I have a family friend who resells airborne's services and our sites do a fairly good volume, so we get some pretty good rates. We require a signature on every package we send. It costs us a little more, but in the end it is worth it. If the driver decides to leave a package on the doorstep with a signature required sticker on it, it is on them. They are good about paying claims (usually within 2 weeks) too. Have you ever tried to make an insurance claim with the USPS...that will take about 2 years off of your life if you let it.

We sell a lot of stuff to Canada as well and we really don't have a problem with fraud up there as our AVS seems to work there. But, we do take some extra steps on all international orders.

1) Email the customer when they order and ask them to verify that they have made the order and that they understand they are responsible for any duties, import taxes or other fees that their customs service may impose.

2) If the order is from overseas, we will call the credit card bank to verify the billing address for the cardholder...this is becomming incresingly difficult as banks don't want to give out this information anymore...or even agree when you tell them what you have for the address.

3) If the order is suspicious (high dollar amount, shady country...Turkey, singapore, russia, etc. we just cancel it)

We also pre-auth the credit cards at the time of the order to make sure there is room on the card. When we process the order and ship it, the card gets charged. If we cancel it for whatever reason, then we are only out the .20 it costs us to pre-auth.

Maybe someone around here needs to start an online database of bad addresses or chargers overseas?

Very true! Get rid of USPS and go with UPS or anyone else.

UPS has an $100 insurance for all packages automatically, and if you need more you can get more, you just have to pay a little more.

UPS is VERY good about sending us a check when something is lost or untracable. Not to mention that they come to our warehouse and pick everything up instead of us going to USPS and waiting in line.

This is another way of getting some of your money back. USPS doesn't care one way or another, UPS cares because YOU are the client.

We're able to get good rates based on the volume that we are shipping.

We have our own rep that we can call (also have her cell phone number), get great incentives.

One thing that I'm always asked when I send disks or CD's of my software is if I want insurance on it. I always say no, and they know what I ship as it is posted on the package!

I haven't heard anyone mention Fraudscreen (www.fraudscreen.net). It's better at detecting fraud than AVS.

Don't expect banks to be helpful in detecting fraud. They expect you to pony up for their fraud detection services. They also make money when fraud goes undetected until too late which is a conflict of interest.

Curt

zoid,

why is fraudscreen better at detecting fraud? I have not heard of them, I just visited their site, but I didn't really see anything that explained why they are better than plain AVS.

Unfortunatly if your anti-fraud it too strict, you will loose legitamate orders. At one point we were loosing 50% of our business to false positives.

We have had more fraud from Flordia than singapore.

We lost more business to anti-fraud, than to the charges in fraud, so we lightened our screening, and its all been fine.

Becareful you need to balance it all out.

I had an order come from Indonesia and had the bill to as a U.S. Address. The phone number was even for someone with the correct name but they did not order the items.

I keep waiting to get an email from this joker asking about the items.
I just cancelled the order.

I think the best thing you can do is delay the order for all people your not 100% sure of (you have a long business relationship). For the rest, use your judgement, not automated solutions.

We had a big issue w/ military orders, they are always flagged as fraud from our old processor, but in reality, they wernt, these people were out of the country, but their card was from here.