Fraud Protection

Fraud is a fact in today’s day and age, especially with the birth and growth of online purchases. However, not all fraud is limited to the card-not-present transaction. We have to be careful of full-blown identity theft as well as credit card number theft. Consumers are very concerned about someone obtaining their credit, debit or check card numbers, and with good reason. However, new fraud protection services offered by Paymentech are helping to decrease the incidence of identity theft and credit card fraud.

Purchases of goods and services by mail, telephone, and Internet are increasing. It is fast and easy, but is it safe? That is typically the question both merchants and consumers ask. Merchants want tools and resources that confirm transactions are legitimate, thereby avoiding fraud. Consumers want assurance that their account information is being guarded.

As the nation's leading processor of ecommerce and direct marketing payment transactions, Paymentech understands the nuances of potential transaction fraud. We have made it our business to become fraud management experts. Here, we put our knowledge to work for our merchants, delivering powerful products and offering third-party fraud protection solutions.

Practices to Avoid

Re-keying Electronic Transactions - Once a transaction has received an electronic authorization, never delete the transaction and re-key it. This will downgrade the transaction and will significantly increase your discount rate for that transaction and your ability to respond to a charge back will be diminished.

Using "Made-Up" Authorization Codes - When an authorization attempt is responded to by a Decline or a Referral, do not make up an authorization code and enter it. Transactions with made up authorization codes will receive the highest possible discount rate and will have no charge back defense. That means that if an authorization code is made up, and the cardholder disputes the charge, the amount of the transaction will be charged back. That is a large price to pay for not calling the voice authorization center.

Settling Transactions Late - With credit card transactions, you can't put off until tomorrow what you should do today. Timely settlement of transactions is necessary to assure the lowest possible discount rate. If you put off settlement, you may pay more.

Behavior to Watch Out For

Behavior to Watch Out For during fraud protection
To control fraud, you need to recognize the signs. Be alert for transactions with several of these characteristics:

• First-time shopper. Criminals usually hit a merchant once and don't return.
• Larger-than-normal orders. (This requires knowledge of what a "normal-sized" order is.) Because they may be using stolen cards or bogus account numbers that have a limited life span, crooks need to maximize the size of their fraudulent purchase.
• Orders consisting of several of the same products. As these items are intended for resale, having more of them increases the criminal's profits
• Orders made up of "big-ticket" items. These items have maximum resale value and therefore maximum profit potential.
• Orders shipped "rush" or "overnight". Crooks want these items in their hands as soon as possible for the quickest possible resale and are not concerned about extra delivery charges.
• Orders from Internet addresses making use of free e-mail services. For these services, there is no billing relationship and often no audit trail or verification that a legitimate cardholder has opened the account.
• Orders shipped to an international address. A significant number of fraudulent transactions are shipped to bogus cardholders outside of the U.S. In addition, the Visa Address Verification Service cannot validate non-U.S. addresses.
• Transactions on similar account numbers. This is particularly popular among criminals who are using account numbers generated by a CreditMaster-type scheme.
• Orders shipped to a single address but made on multiple cards. This is characteristic of a scheme based on CreditMaster-generated account numbers or a batch of stolen cards.
• Multiple transactions on one card over a very short period of time. Sometimes this is an attempt to "run" a card until the account is closed.
• Remember, none of these by itself means fraud-but several of them together might. Check everything. Never ship a valuable order unless it checks out and you have received a valid authorization.

Card Not Present Transactions

Ask for the card expiration date. The Visa U.S.A. Operating Regulations states that where possible, card-not-present merchants should ask customers for the card expiration, or Good Thru, date. Including the date in your authorization request helps to verify that the card and transaction are legitimate. A MO/TO or Internet order containing an invalid or missing expiration date may indicate counterfeit or other unauthorized use.

Ask for CVV2 to confirm the cardholder has a genuine Visa card. The Card Verification Value Service (CVV2) is a three-digit security number indent-printed on the back of Visa cards to help validate two things:

• The customer has a genuine Visa card in his/her possession.
• The card account is legitimate.

Train your employees to recognize suspicious orders and customer behavior. Being able to recognize suspicious orders may be particularly important for merchants involved in telephone sales. Employees should also be given clear instructions on the steps to verify these transactions to avoid fraud. Read more about CVV2 below.

What to Do if You Are Suspicious

If you are suspicious about an order, try to verify the transaction by asking the customer for additional information. These requests should be made in a conversational tone so as not to arouse the customer's suspicions. If the customer balks or asks why the information is needed, simply say that you are trying to protect cardholders from the high cost of fraud.

Ask for a Code 10 authorization for fraud protection. A separate phone call to your authorization center asking for a Code 10 authorization lets the center know you have concerns about a transaction. Ask for the name of the financial institution on the front of the card. Separately confirm the order with the customer. Send a note to his/her billing address, rather than the "ship to" address.

Online Transaction Safety

Look for SSL Use – SSL or Secure Sockets Layer offers protection for many online transactions to prevent fraud.

SSL provides you with sound privacy protection by encrypting the channel of communication between you and the consumer. Using a mathematical formula, SSL puts the information you exchange into a complex code. Think of it as a kind of armor over the information. Even if intercepted, your data would be extremely difficult to read.

In plain English, SSL helps the consumer's browser automatically scramble his information-such as a credit card number-before it is sent to the merchant. After that, SSL allows only the merchant's software to unscramble this data. Through SSL, you and your customers can complete transactions with the confidence that no one else can read, change, or fool with their payment information as it travels over the Internet.

Since the data sent is secure, SSL is now considered more than enough security for consumers to do business with merchants they know and trust.

To find out if your transaction is guarded by SSL, look for the picture of the unbroken key or closed lock in your browser window (both the Netscape Navigator/Communicator and Microsoft Internet Explorer browsers use SSL). Either indicator means SSL is hard at work. (If you do not see either one or if you see a broken key or an open lock that means SSL is definitely not hard at work protecting your transactions.)

The easy way you can tell if SSL is guarding your transaction, though, is to check the URL of the site you are visiting. It should change from "http" to "https" when processing secure transactions.

Don't Send or Accept Payment Info via E-mail

E-mail works independently of any security software, such as SSL or SET, and is not protected by them. E-mail is vulnerable and its use should be avoided to send or receive sensitive personal information. Make sure to use a secure browser, such as Navigator (2.0 or higher), Microsoft Internet Explorer, or AOL, when accepting payment information from a customer. Also, make sure that your site uses a secure Internet technology such as SSL or SET for fraud protection.

What’s more, for enhanced fraud protection, you can avail of a range of services only at Credit Card Transactions Inc!