| The number one way online merchants are impacted | | | | 2. Be sure to ask for the CVV2 |
| by fraud is via the credit card and bank account | | | | As with AVS, be sure you keep this option turned on |
| charge-back. This takes place when a buyer asks for | | | | as well. This option requires that a customer enter in a |
| a charge to be removed from their account due to | | | | "card verification value" on the back of the card - |
| one of two reasons: | | | | usually 3 or 4 numbers. The customer must have the |
| 1. Their card was stolen or used without their | | | | card in hand and can not proceed with the order |
| permission. | | | | unless they do. |
| 2. The customer isn't happy with the quality of the | | | | 3. Be sure to process only approved sales |
| goods you shipped, or feels you did not live up to your | | | | If a transaction is declined - for whatever reason - DO |
| obligations in delivering the product or service. | | | | NOT process it. Many feel the declined transaction |
| Unfortunately, the occurrence of charge-backs is at an | | | | was an error and process the transaction anyway. |
| all time high and shows no sign of letting up. Where the | | | | Don't do it. |
| life blood of an online business is their payment system | | | | 4. Check out email addresses |
| which almost always involves accepting credit or debit | | | | Always be sure to require and email address from |
| cards, this problem has the potential to ruin a business | | | | every customer. If an email address looks odd, don't |
| in relatively short order. To be sure, there are honest | | | | be afraid to call the customer to verify the address |
| people who use this process because of legitimate | | | | before processing the order. |
| reasons. However, there are also many who use this | | | | 5. Watch out for excessive orders |
| process to scam business owners out of money that | | | | While it may be exhilarating to get a huge order, |
| is rightfully theirs. When a charge-back takes place, it's | | | | beware! Buyers who use stolen credit cards will often |
| quite possible that the merchant won't even get their | | | | purchase extremely large numbers of of the same |
| merchandise back, so not only is the merchant out the | | | | product. Don't process any out of the ordinary larger |
| money they were paid for a product, but they no | | | | orders until you are able to verify the order with the |
| longer have the product either! | | | | customer by looking up the phone number for the billing |
| According to a report by Merchant 911, over 90 million | | | | address and calling them. |
| credit cards were stolen in 2007. 90 million! This | | | | 6. Communicate with your customer |
| resulted in nearly 4 billion dollar loss for e-commerce | | | | If you experience a back order or other delay in |
| businesses. Online businesses don't have the ability to | | | | shipping an item, call or email your customer to let them |
| verify or authenticate a cardholder's identity, so they | | | | know and give them the option of cancelling the order |
| are far more susceptible to problems with | | | | and getting a refund. This will be far cheaper than |
| charge-backs. As mentioned earlier, you've got the | | | | having to deal with a charge-back. |
| issue of the lost money from the sale, the lost | | | | 7. Keep proper records |
| merchandise, the lost fees your processor charges | | | | Be sure to keep printed copies of all online order. In |
| you for the transaction as well as the charge back | | | | addition, be sure to retain all email communication from |
| and any shipping costs that you've incurred to get the | | | | customers regarding their purchase of goods from |
| product to the customer. While this all sounds pretty | | | | you. This information could come in handy when |
| bleak, there are a number of basic security strategies | | | | fighting a charge-back. |
| that you and your employees can employ to cut down | | | | 8. Be certain to adhere to merchant account policies |
| on this most troubling of issues. | | | | No matter who you use for a credit card processor - |
| My top 8 tips for avoiding customer charge-backs | | | | a bank or PayPal for example - be sure you are |
| include: | | | | aware of their charge-back policy and be sure to |
| 1. Verify Addresses | | | | follow their recommendations for preventing and |
| Be sure you are using the Address Verification | | | | dealing with charge-backs. |
| Service (AVS) that most credit card processors | | | | Accepting credit cards is one of those necessary evils |
| provide in their credit card software interface set ups. | | | | of doing business online because it's the easiest and |
| With most systems, you can dictate what happens | | | | quickest way for your customers to pay you. But as |
| with orders that have shipping addresses that don't | | | | shown in this article, the process can be fraught with |
| match billing addresses. Anything from rejecting the | | | | risk. By following the 8 tips I've provided above, you |
| order to putting it on hold so you or a staff person can | | | | should be able to significantly limit your exposure to this |
| verify the address with the customer. Whatever you | | | | most troubling aspect of accepting credit cards in your |
| do, don't turn this option off. I've caught many | | | | business. |
| fraudulent orders via the AVS system. | | | | |