Five Key Warnings Signs of Potential Online Fraud
Online fraud is becoming a major problem for online merchants in the marketplace with as many as 20% of all transactions being fraudulent. There are five key warning signs that all online merchants need to be aware of when doing business online. If you miss one of these warning signs, you could potentially be left with an enormous bill from your merchant facility.
Warning Sign 1: Name on Card Doesn’t Match Buyer
The biggest warning sign that a transaction maybe fraudulent is when the credit card supplied doesn’t match the registered buyer’s name. This doesn’t always indicate that the transaction is in fact going to be fraudulent but it is a major red flag.
Warning Sign 2: Customer Users Generic Email Address
One of the biggest warning signs for me when I suspect that a transaction is going to be fraudulent is when the customer users a Free email account from organisations like MSN or Yahoo and the name used is just a series of letters that have absolutely no meaning. If a person is a legitimate buyer you would expect their email address in particular the name element of the email address (that is the part before the @ symbol) would in fact mean something.
Warning Sign 3: Customer E-mail’s Bounce
I recommend to all merchants that they always contact their customers and confirm their email address. If you can not contact the customer easily then more then likely they are trying to act in a fraudulent manner. For all of our download products, we now send an email to the customer to provide them with the download location. We do this to ensure that the customer has in fact provided us with a valid email address and it is one of the checks we do to ensure we aren’t about to be another victim of online fraud.
Be aware that merchant facilities, even with Paypal, the customer has all the rights and the merchant has very little. If a customer goes back to their credit card company and claims you have acted fraudulently, the merchant facility will simply remove the money from your account and then charge you a fine anywhere from $10 to a couple of hundred dollars. When you signed your merchant facility, whether you realised it or not, you simply accepted this is the way you were prepared to do business.
My policy is that if a person’s email doesn’t work, then most likely the transaction is fraudulent and I immediately refund the money. This way I am protecting my firm against being charged penalty fees for fraudulent transactions.
Warning Sign 4: Postal Address Doesn’t Exist
It doesn’t matter whether you are selling download products or products to a physical address, you should always require the customer to provide you their physical address. The reason I require the customer to provide this is to ensure that we have another point to test to see if the customer is in fact a fair dinkum buyer. Many merchants will no longer allow people to send products to Post Office Boxes. The reason merchants are requiring this, is that products like Google maps allow you to check whether an address actually exists and the problem is that it is more difficult to identify who owns a Post Office Box than a physical address.
Before sending any products to clients always ensure that you confirm the address is valid.
Warning Sign 5: Customers Only Provide a Mobile Number
In a mobile world, it is quite common for a customer to have a mobile phone but as a merchant this is a major problem. When doing business online it is a warning sign that there could be problems if a customer only provides a mobile number. A mobile number is harder to verify as legitimate compare to a land line. With a landline you can in fact use one of the online telephone books like Whitepages to verify addresses where as most mobile numbers are in fact unlisted.
Whilst it is possible that a customer could be legitimate and still have all five warning signs, experience tells me that this is unlikely and as a merchant you need to be aware of the potential liability you may face if this customer does decide to advise their credit card company that the transaction they have done with you is fraudulent. This could leave you with an expensive merchant fine and a loss of your valuable stock.
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