Web Hosting: How to check orders for fraud?
It’s order time. A customer signed up for your services. You are reviewing the order. You now have a new customer and will be making $X dollars more a month, but what if this purchase was done with a stolen credit card? You would be facing a chargeback on your account and eventually get into reliability problems with your merchant account provider. If you get hit with a lot of charge backs this can either cause a rise in your rates at your credit card merchant or worse your merchant account being canceled and terminated. Therefore it is very important that you screen all incoming orders for credit card fraud.
Order IP Location Doesn’t Match Billing Address
Check each order IP for its geographical location. Does it match the address of the order at all? If you get an order from Joe Average of Chicago and the order IP address is China or Romania, this should ring the alarm bell. If possible implement the AVS (Address Verification) feature of your merchant account. This useful feature automatically does this check for you when running a credit card charge. You should still verify IP and geographical address in addition to that.
Email Address Verification
Taking a closer look at an email address of an order is another good step to identify fraud. Free email accounts are often used to place fraudulent orders. But then again – some people use free email accounts to have an off network email address for better availability. Remember that you are a web host how would the customers communicate with you via email, if their server is down (worst case scenario). Some web hosts make it a habit to refuse orders coming from email addresses from countries like Russia or China as these are especially known for a lot of fraud. An email address alone is usually not an indicator of a fraudulent order, but it can be an important piece of the puzzle.
Fraudulent orders are often placed for the highest dollar amount possible. In hosting this might mean that a customer is trying to pre-pay for 6 months or a full year. Stolen credit cards tend to be used to buy a longer period since the thief knows the credit card will be canceled and is hoping that it just takes a while so that he can use the hosting account for more criminal activity.
Does the information such as customer name and address appear to be formatted correctly? Criminals placing a fraudulent order often don’t take the time to use proper writing/spelling. They just use lower case writing for the entire name and address information. Or they might just use all caps. Watch for both as they are good indicators if the order is placed from a real customer or not. Anyone taking a little pride in himself uses proper upper case / lower case writing for his personal name and address.
Sooner or later you will be facing a fraudulent order. Fraud cannot be completely avoided, but with good fraud checking procedures in place and some experience under your belt you will reduce the risk of having a fraudulent order slip through. If in doubt, just calling a new customer might solve any issues you have with an order and it actually might help to make the customer feel like he is dealing with a very professional business he can trust.
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