How to Prevent Fraudulent Orders and Chargebacks
2nd June 2011 - Posted By James Parmee Morris

All businesses aim to avoid fraudulent orders and chargebacks. Indeed, the mere mention of chargebacks is often enough to send shivers down the spine of any business owner, for it is well known that chargebacks cost you money, can tarnish your reputation and may even affect your merchant account status.

The good news is that there are procedures you can implement that can help you to avoid fraudulent orders and chargebacks. By simply following our top 5 tips to help prevent fraudulent orders and chargebacks, as listed below, your company can help to protect itself and its customers.


1 - Flagging Rules

Flagging up suspicious transactions as they are placed can help save time and money in the long run. Be on the look out for orders that contain unusually large quantities or exceed order total thresholds. Also, beware of multiple orders that are placed in a short space of time. Evidence dictates that you should also apply flagging rules to customers who use free email providers or those who enter a billing address that is different to the shipping address.

2 - AVS and CVV2 checks

AVS (Address Verification System) and CVV2 (Card Verification Value) checks on credit card payments are a really simple fraud prevention system that all businesses must use. Likewise, with regards to Paypal customers, the best way in which fraudulent transactions can be avoided is to ensure that their PayPal status is verified.

3 - Check IP and/or phone number to location.

Overcome crafty fraudsters by being wise to IP/phone number locations. Always flag up any orders that have conflicting billing address and IP/phone number details. For example, if the billing address shown is in Manchester, England, but the IP address or telephone number are listed for Nigeria, be sure to either automatically block the transaction or request further details. Asking for proof of ID or a copy of the credit card being used should be enough to sort the fraudsters from the real customers.

4 – Avoid innocent chargebacks

Protect yourself from innocent chargebacks by making sure your business phone number on your website and provided in the customers credit card statements is fully operational and answered by a real person! Many people who raise 'innocent' chargebacks do so because they simply do not recognise the transaction. However, you can overcome this by ensuring a call answering service is in place to sort out initial enquiries.

5 – Verify orders by phone

Verifying orders by phone is perhaps the best practice a business can employ to prevent fraudulent orders and chargebacks. Not only does calling customers to verify orders reduce the risk of fraud, it enhances a company's customer service reputation.

To get the most out of verifying orders by phone a company should call their customers before processing orders on the phone number they have provided. This simple act will increase overall customer experience in several ways.

First, it will verify that ordered items and delivery information is correct, which in turn will help to lower returned item rates. It also allows you to confirm that the phone number you have been given is correct, which is paramount in preventing fraud, as generally someone committing fraud will not give their real phone number when placing an order.

Crucially, call verification also allows you to hold possession of a recorded verbal agreement of the order over the phone, which could prove invaluable should the order turn out to be a fraudulent one or if a chargeback is later claimed.

Many companies miss out on the benefits of call verification due to lack of time or resources. However, this can be easily overcome by employing an order verification service. An order verification service should be seen as an investment that can actually save your company money in the long term.

More information on how you can protect your business from fraud by using an order verification system can be found here: http://www.phonesupportworldwide.com/services/efraudcall-order-verification/

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