Your thoughts on fraud detection and validation

[AbleMods]

I am starting this thread for pure education purposes. Some of us forum members are not seasoned Ecommerce merchants, myself included.

The concept of purchase fraud is quite intimidating, especially when you're starting something new and don't have sufficient resources to absorb large losses in a short period of time.

I'm hoping some of the veterans here might be willing to share their experience, procedures and tips on recognizing potential fraud and their approach to customer identity validation.

I think a good (starting) format would be...
Identification What do you look for or what are your "triggers"
Validation What methods or services do you use to ensure identity
Recourse What procedures/policies do you follow when identity cannot be validated.

Here's mine:
Identification
My primary fraud identification is a difference between billing and shipping addresses. If names are different, that's a higher flag. If they are in different states, that is the highest suspect flag. This applies to orders over $100 with different billing/shipping addresses and over $500 regardless of addresses. My order volume is still low enough I can afford the time it takes to do this.

Validation
I submit a history note to the order requesting the customer service number from the card issuer located on the back of the card. I also submit one call to the contact number provided with the account in an attempt to confirm the purchase verbally.
Account and purchase information is validated with the card issuer and, if the purchase is confirmed as authorized, the order is placed.

Recourse
If there is no response in 5 days, one more note is added. 48 hours later the card is refunded and the order is cancelled.

That's all I've got. There's probably alot more, but I'm learning as I go.

Hopefully, if others will share their knowledge, this thread will be immensely valuable to newcomers such as myself.

Thanks!

[compunerdy]

I cross my fingers.

[Shopping Cart Admin]

Hello Guys,

Judy is an expert in this area. Paintball gear is something kids want but often times cannot afford. There have been a number of posts on this subject which Judy was involved in. Might want to do a few 'fraud' searches and then link them up in this thread. Then expand as needed.

[jmestep]

Sorry, I haven't had time to post on this. I know I did a long post earlier but haven't had time to find it. We just ran into a new wrinkle. Gang up with a friend of yours- you both need to be in the same city out of state- the bigger the city, the better. Order some stuff using #1's charge card and delivery address, make sure you are at #1's house when delivered, but #2 sign for the shipment. #1 does a chargeback, saying the purchase were unauthorized and he didn't receive them, even though #2 received at #1's house and signed for them. #1 gets his money back, they have the merchandise, the local police won't do anything about it because the victim (the merchant was out of state). Merchant even tries filing a mail fraud complaint since the Post Office delivered some of the merchandise but Post Office never handles the complaint. Yes, this really did happen.

[MartinZ]

Yikes! Sounds like it is about time to capture the signature and photograph of the signee for the merchandise.

[AbleMods]

I won the only major chargeback against me this year. Order had separate bill-to and ship-to addresses.

I had a full AVS match, full CVV match, shipper tracking information (incl signature delivery) and the IP access log history from AC7. Submitted all of this to the bank/processor to include in their response to the issuing bank.

When the chargeback was initiated, the processor removed the funds from my account. Within a few days of providing my documentation/response, the funds were "tentatively" returned meaning they could still take them again pending the chargeback result.

So it does pay to go the extra steps in fraud detection the few times you need it. All the other fraud attempts (and there have been many) were caught in advance of product being shipped.

Once the chargeback result was determined in my favor, the case was quietly closed. They didn't even send me a "You got lucky this time" email

[jmestep]

Wow, it must not have been Discover or a Citybank card. You can lose them even with all that info.