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5 Tips on How to Protect Yourself from Fraudulent Transactions

By: Tisha Rogers
Director of Operations, WorldwideBrands.com

Remember, as a retailer, you are responsible for any fraudulent transactions that are processed in your online store. They could result in chargebacks from the actual cardholders and you could end up losing double the money. You will have to refund the cardholder, and if you already placed and shipped the wholesale order, you are out the Wholesale Cost of the item. Also, don’t forget that Merchant Account companies charge you chargeback fees!

Fraudulent transactions run rampant on the internet. There is no way to completely stop them, but I do have some tips to share with you that will help you recognize them before you lose TOO much money.

1. Get as many details as you possibly can when the customer is processing the order in your shopping cart. You want to know name, address, phone number & email address. If anything comes back from your merchant processor as unmatched, immediately call the cardholder to verify the charge. You don’t want to ship anything out until you verify!
2. Be very cautious if the shipping address is to a place in Nigeria, Malaysia, Indonesia & Eastern Europe. This is where the heavy concentration for fraudulent orders stem from. You can make it a rule in your store that you will not sell nor deliver anything to those addresses and block the orders before they even attempt to process.
3. Be extremely cautious if a customer places a LARGE order in your store. Yes, it is exciting, but you should make it a rule that if anyone places an order that exceeds $100.00 or $200.00, that you phone to verify the order.
4. If you have employees that have access to process cards, pay close attention to them! Never give a new employee access to delicate areas such as the payment processing area until you build up trust and make sure to keep detailed records about the employee. For example, here at WorldwideBrands.com we do not give access to payment processing areas until they have been employed with us for at least a year. We also perform detailed background checks and obtain all the contact information that we can. Also log the sites and areas that you have given access to and record any special logins that you have created for them. When that employee is let go for any reason, IMMEDIATELY change all passwords and close down access. It is also a good idea to change passwords for things that you are unsure if they knew how to access or not. Especially if you have other employees. Stress to all employees to NEVER share any login. If another employee needs access to something, they need to talk to upper management.
5. If possible, get the IP address where the customer orders from. The IP address greatly helps in determining fraudulent orders. If the IP address location doesn’t match their credit card details, do not process that order! Call the customer first to confirm the order. There are plenty of free tools online that will tell you the location of a particular IP address. It will give you the City & State that you can match with the order details.

Your merchant account company may already have fraud order detecting software built into their payment processing to assist you with recognizing fraudulent orders. Make sure that you understand their process for doing that. But even the best detecting software can miss some orders. Some of these scammers are very clever. That is why it is important to follow the tips above to help recognize these orders as well. You can’t always rely on technology! Sometimes you just have to take the hands on approach.