It seems there is a new story everyday about people’s personal and credit card data being stolen from this company or the other. In this age of technology, it is easier than ever to obtain other people’s information as most people are more than willing to put it out there for anyone to see. As you would expect, this leads to an increase in identity theft and credit card fraud. The good news is that credit card companies and banks have put many different programs into effect to protect the consumer. The bad news the real victim of these crimes is ends up being the businesses themselves.
They are the ones paying the ultimate cost. This cost is not just the actual money lost when the charge is reported as fraud and the card company takes the funds back. Think of all the other costs it took just to make the transaction. There is the processing fee, employees pay, and all of the other overhead that you pack into the margin of your product. On top of all of this, the quantity of charge backs is on the rise. Charge backs lose money, time fighting them, and can even lead to completely losing your payment processor.
So, the real question is – What can you as a business do to limit your exposure to these online criminals? It is not an easy battle as the amount of face-to-face transactions is decreasing being replaced by click-and-go instant gratification sales. This fact is not a bad thing as the more people you can help with button clicks the more successful you can be from a profit standpoint. And let’s face it, profit is the reason you got into this game. Why should all of the hard you work you put in be damaged because someone is taking the easy way by stealing from others? They are finding new ways to steal everyday and you must adapt to survive.
Steps to Prevent Online Fraud
Customer Verification – Try to obtain all the information possible from your customer. This should include home address, name, email address, phone numbers, and IP address from which the customer is accessing your site.
Card Verification – If you accept credit cards, especially online, you should be obtaining the full name on the card, billing address, CVV code, expiration date, and some kind of agreement the customer must sign or click. The agreement is basically showing you have permission to use this card.
Third Party Fraud Prevention Service – As a merchant, there is only so much you can do on your own. Most likely, you expertise is in your specific business and not in security and fraud prevention. Third party services generally keep a massive data base and have many checks in place to limit fraud to the lowest possible. The money saved is generally equal to, if not more than, the amount you pay for these programs.
Unfortunately, fraud is just a cost of doing business these days. There is no way to completely eliminate it from your business model. However, with in-depth verification up front, and a robust back-end prevention service, you can reduce the effect on your profits. The longer you wait to change your practices the more money you are flushing down the drain.