Small Online Merchants - Ten Steps to Avoid Credit Card Fraud
I'm personally involved with the operation of four different web sites that sell to consumers and frankly I'm getting really angry about internet fraud because, as a small merchant I'm the one that it hurts. When credit cards are used fraudulently it's not the banks that are on the hook - although they'd happily let you believe that they are. And consumers are not on the hook. And the suppliers are not on the hook. It's us - the poor fools in the middle - the smallest fish in the food chain.
In the last week, I had a $1000.00 fraudulent order was caught before it
shipped, but missed a $250.00 order placed with a stolen card that was sadly
made on a product with almost no margin in the first place - so I got to eat 90%
of the cost as a raw number, never mind that the remaining 10% was supposed to
go to overhead and marketing and all those other wonderful things, so all told
that write off cost more than 100%. Sweet, eh?
I'm angry that as far as I can see, these scum balls use stolen credit cards that are shipped to a real address - the consumer complains when they see the bill. The credit cards charge it back to the merchant and our payment processors slap on about a twenty five buck penalty, because I guess we haven't been worked over quite enough by then. And the people who perpetuated the fraud keep getting away with it. It seems that crime does pay after all, but then, I'll bet that most of the people reading this article have already reached the same sad conclusion.
So what can a small merchant to do protect their business?
The most important thing you can do is simple. Inspect every order. Here's what to look for:
1. Compare the billing and the shipping address. Many people send out gifts to others through an online purchase so a lot of them will be legitimate, but this is still the first thing to check for.
2. Always ask for phone numbers on your order forms and ignore the gurus who'll tell you that this will increase your shopping cart abandon rate. It will, but this is important information. Compare the number you are given with the address. There are some very easy to access online charts that will show what area codes go to which states. There's one for sure at Greatdata.com. If you have a billing address in Texas and the phone number in Nevada- your "someone's-trying-to-rip-me-off" radar should now be on high alert. Make the same check on the shipping address and phone number.
3. Look for Hotmail or Gmail addresses on both the billing and shipping side.
4. Look for unorthodox names. Believe it or not, that $1,000 order was being shipped to Ladysmith Moneybags. I'm not kidding, either. Talk about literally adding insult to injury.
5. Look for an order with several of the same items.
6. If you're not sure, don't ship it immediately.
7. If the phone numbers don't match up, do a white pages search for another telephone number connected to the cardholder (their name and address might just be the only legitimate information you have) and phone them to verify the order.
8. Look for orders shipping out of the country.
9. Cultivate a good relationship with your suppliers. Most of them are smaller businesses with people who have seen a lot of rip offs before. Just be sure that they like you enough to be willing to help out, but don't count on them exclusively because if they ship - YOU PAY.
10. If something looks really dicey, you can always ask for a certified check or a money order. But a wire transfer is NOT a safe alternative; lots of scams are built around fake wire transfers. And if you think for just one second that your own bank will back you up, forget it. When, you take a bad order, no one but you will be left holding the bag at the end of the day.
The only good news is that if you do take a good look at your orders, you'll catch a lot of the bad orders, because most of them are really not all that difficult to spot.
I'm personally involved with the operation of four different web sites that sell to consumers and frankly I'm getting really angry about internet fraud because, as a small merchant I'm the one that it hurts. When credit cards are used fraudulently it's not the banks that are on the hook - although they'd happily let you believe that they are. And consumers are not on the hook. And the suppliers are not on the hook. It's us - the poor fools in the middle - the smallest fish in the food chain.
In the last week, I had a $1000.00 fraudulent order was caught before it
shipped, but missed a $250.00 order placed with a stolen card that was sadly
made on a product with almost no margin in the first place - so I got to eat 90%
of the cost as a raw number, never mind that the remaining 10% was supposed to
go to overhead and marketing and all those other wonderful things, so all told
that write off cost more than 100%. Sweet, eh?I'm angry that as far as I can see, these scum balls use stolen credit cards that are shipped to a real address - the consumer complains when they see the bill. The credit cards charge it back to the merchant and our payment processors slap on about a twenty five buck penalty, because I guess we haven't been worked over quite enough by then. And the people who perpetuated the fraud keep getting away with it. It seems that crime does pay after all, but then, I'll bet that most of the people reading this article have already reached the same sad conclusion.
So what can a small merchant to do protect their business?
The most important thing you can do is simple. Inspect every order. Here's what to look for:
1. Compare the billing and the shipping address. Many people send out gifts to others through an online purchase so a lot of them will be legitimate, but this is still the first thing to check for.
2. Always ask for phone numbers on your order forms and ignore the gurus who'll tell you that this will increase your shopping cart abandon rate. It will, but this is important information. Compare the number you are given with the address. There are some very easy to access online charts that will show what area codes go to which states. There's one for sure at Greatdata.com. If you have a billing address in Texas and the phone number in Nevada- your "someone's-trying-to-rip-me-off" radar should now be on high alert. Make the same check on the shipping address and phone number.
3. Look for Hotmail or Gmail addresses on both the billing and shipping side.
4. Look for unorthodox names. Believe it or not, that $1,000 order was being shipped to Ladysmith Moneybags. I'm not kidding, either. Talk about literally adding insult to injury.
5. Look for an order with several of the same items.
6. If you're not sure, don't ship it immediately.
7. If the phone numbers don't match up, do a white pages search for another telephone number connected to the cardholder (their name and address might just be the only legitimate information you have) and phone them to verify the order.
8. Look for orders shipping out of the country.
9. Cultivate a good relationship with your suppliers. Most of them are smaller businesses with people who have seen a lot of rip offs before. Just be sure that they like you enough to be willing to help out, but don't count on them exclusively because if they ship - YOU PAY.
10. If something looks really dicey, you can always ask for a certified check or a money order. But a wire transfer is NOT a safe alternative; lots of scams are built around fake wire transfers. And if you think for just one second that your own bank will back you up, forget it. When, you take a bad order, no one but you will be left holding the bag at the end of the day.
The only good news is that if you do take a good look at your orders, you'll catch a lot of the bad orders, because most of them are really not all that difficult to spot.
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