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Fighting Online Fraud

Posted by: Rod Kurtz on March 4, 2007

Small online merchants often don’t get serious about security until they are hit with serious fraud. Here are some simple tips to improve e-commerce security for little or no cost:

1. Make sure you have an AVS (Address Verification System), which runs every time an order is placed. AVS matches the customer’s credit card to the customer’s billing zip code.

2. Screen orders that meet certain criteria. For example, screen all orders over $200 going to a P.O. box or scheduled for overnight delivery.

3. Set up your system to pre-authorize the credit card when the order is placed and charge the card when the order is shipped out.

4. Don’t store credit-card numbers—just store authorization codes.

5. Ensure that your fraud prevention is not limited to credit-card orders. Checks and Western Union transfers also have a high incidence of fraud.

6. At the very least, run a fraud check report on select parameters two to three times a day. This will help to red-flag orders that are suspect. This could cut your fraud by up to 50%.

The trick to fraud is managing by exception. Let the system catch the exceptions instead of trying to eyeball each order.

Sandeep Walia
President & CEO
Ignify Inc.
Los Angeles

Reader Comments

Araceli Ramirez

June 8, 2007 11:02 PM

I got scammed out of $150 on the Internet. I used my bank routing and account number. My bank was not able to stop the transaction from going through. When my bank loked it up on their system it showed the name of the "Internet Company" that took the money from my account. It also showed a number which I called. Some guy answered and said that I was being scammed and that for some reason the calls were being forwarded to his phone. He also told me that he had already contacted the authorities about this matter. Is there any number I can call or free Web site I can go to to get this investigated?

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