You thought a hearty "Congratulations!" would be in order. Your online business was still in its first week and had already received a whopping $5,000 order. There was just one catch-it had been placed with a stolen credit card number. The tip-off came when you saw that the order, ostensibly placed by a credit card holder with a U.S. billing address, was to be shipped to faraway Indonesia. A quick phone call to the real card holder, who told you she didn't have the foggiest idea about the order, confirmed your suspicion.
Sometimes, sniffing out fraudulent transactions can be a matter of common sense. While online fraud tactics are be-coming increasingly sophisticated, preventing credit card fraud doesn't have to require expensive monitoring tools. Much of fraud prevention lies in knowing how fraud works.
Take, for example, this loophole in shipping companies' customer service policies: Any allegedly legitimate buyer can ask his merchant for the tracking number of his shipped order; the customer can then call the shipping company with the number and change the shipping address. This allows a person with a fraudulent credit card to clear a merchant's antifraud Address Verification System (AVS), which ensures that the customer's credit card billing and shipping information match bank records and each other. After having his or her order approved, any poseur can obtain his or her package's tracking number and change the original delivery address to his or her own.
Developing a policy of withholding the tracking numbers of overnight packages until delivery time has passed can serve as a simple but effective part of your strategy against electronic credit card fraud.
Mie-Yun Lee is the founder and editorial director of BuyerZone.com, an Internet purchasing hub for small businesses. Kaukab Jhumra contributed to this article.