The holidays and protecting your business from card not present fraud

If you are a merchant with an e-commerce system or any system that accepts payments via a card-not-present solution you know that the holiday season is a time for rampant fraud. In many cases it will be you, the merchant, that is left holding the bag which is unfortunate but there is little that you can do. Is there anything that you can do to protect yourself as we enter this most festive season?

For merchants this time of year can be overwhelming and hopefully it is. That means that you are moving a lot of products and services and your are hopefully busy fulfilling orders. You don’t have an army of employees that can check every minute detail of an order to try to spot fraudulent orders and if you sell nationwide or even worldwide it makes spotting fraudulent orders even tougher.

Many merchants instead turn to automation to handle fraud prevention but sometimes that can get a bit overzealous and decline legitimate transactions. In fact it is believed that in 2016 US merchants lost $8.6 billion dollars in sales due to false declines, which is actually $2 billion more than card-not-present fraud cost.

The problem is that fraud is rising nearly all across the board and everyone, from merchants to processors to acquirers are trying to stop it. This has lead to extremely strict rules which has led to many legitimate transactions being halted. The problem during the holidays is that many buyers change their buying patterns which is the biggest trigger of a false decline.

As a merchant do you know how many chargebacks you had last holiday season? Do you know how many false declines you had? If you are seeing too many of either you may need to find a better balance or look at changing your card-not-present solution.

Even if you feel comfortable with the amount of fraud that you are being forced to eat as the “cost of doing business” there is more that you can do. Hopefully you are following the best practices and are PCI compliant, If not that need to be fixed yesterday. Does your system allow a potential criminal to enter credit card information an infinite number of times or does it lock them out after the third failure? This small step can go a long way towards preventing fraud.

Fraud prevention can also be tailored to specific platforms, like a phone, a desktop or a laptop. Since many more cases of fraud are done via mobile devices. Knowing this can help you to tailor a better plan.

Another easy way to prevent or at least take a bite out of card-not-present fraud is to look at your shipping practices. During the holidays you want to get orders out as quickly as possible so it is understandable that when an order comes in your want to get it into the mail asap. That is exactly what thieves are counting on since one that package is in the mail it is gone. Experts recommend waiting until the payment has been processed and approved before shipping an order, especially an expensive one. All orders should be tracked and you can also require a signature to receive the package. Also be on the lookout for any in-transit rerouting that is done to the package. If you see that there may not be much that you can do but you have the buyer’s information (credit card number, name, address, IP address) and you can add that to your file (hopefully you are keeping track of this type of information) so that the next time you won’t fall prey. Don’t forget to keep that updated too.

Since the introduction of the EMV cards in the US there has been a marked rise in cyber crime. If you have not fallen victim consider yourself lucky. It does not have to be the “cost of doing business” anymore and as merchants become more aware they can utilize more tools to fight back. Stopping credit card fraud is something that everyone can benefit from and if you need help JLE Business Consultants is here for you.