Spot Fraud and Avoid Stolen Credit Cards

If your business accepts credit cards, then there may be a time when you have a customer use a credit card that is not rightfully theirs. When customers commit fraud, then your business is exposed to the risk of chargebacks to recoup the lost funds for the customer who was victimized by fraud. By knowing what steps you can take to help mitigate the risk of fraudulent transactions and processing stolen credit card numbers, you can help protect your business by being able to spot fraud and avoid processing stolen credit cards.

Below is a thorough list of questions that you can ask to help verify the legitimacy of a transaction. Not all steps will apply to each transaction but being aware of what they are can help you avoid processing stolen credit cards.

Are there multiple orders for the same customer using different credit cards?

Be on the lookout for multiple orders with the same shipping address but different credit card numbers

Is the transaction size or the items purchased out of the ordinary?

Often fraudsters will purchase items that they can resell, like a specific shirt of every size or color, or a large number of the same item. Compare every new order with previous ones and be aware of orders that don’t fit with the rest of a customer’s order history. Very large transactions that seem too good to be true often are.

Does the shipping address match the billing address?

Although it can have a small impact on some legitimate sales, by only allowing the shipping destination to be the same as the billing address, you can greatly reduce your exposure to fraud. This is because fraudsters will often use the billing address of the stolen cardholder but will put their own address as the shipping destination. If you do not wish to enforce this limitation, make sure that the shipping address is at least within the same city, province, or country depending on your risk threshold.

Has there been a series of declined orders with the same shipping address?

Fraudsters often have a list of stolen credit cards and will try each one until they get an approved transaction. Be vigilant and take notice of a series of “DECLINED” and “PICK UP CARD” notices.

Have there been prior chargebacks from a similar address or location?

Certain countries and regions have large fraud problems, and many online retailers refuse to ship orders to those regions. Look for patterns based on your previous chargebacks and make decisions on what you will allow. If fraudulent orders to a specific country go over a certain %, strongly consider banning that country from purchasing from your online store.

Did you require the CVV during the payment/checkout process?

There are no longer any major card brand credit cards without a security code on the back. If you are manually entering your customer’s card information, you should always ask for the CVV code and enter it as part of the transaction. If your customers are entering their own information during the checkout process, you should require the CVV code and not allow the security check to be by-passed. Just remember to never record or make note of the CVV, it is a violation of the Card Brand Rules.