How Merchants Minimize Credit Card Fraud Online

Most credit card issuers and businesses that accept online credit card payments provide and implement a growing number of methods of credit card fraud protection. These methods may seem annoying at times and even perhaps a little intrusive but they are all there to help to protect your credit card account from fraudulent usage. Here is a brief review of some of some of these methods so that you as a consumer have a better understanding of just how credit card fraud protection works and how it is all there for your own good and not just to annoy you or make checkout more cumbersome:

Address Verification

Address verification is an extra security measure implemented by a great many Internet merchants and vendors and there are a couple of different ways that Internet merchants go about address verifications. One of the most common methods is that a merchant will actually contact the credit card issuer – either electronically or by phone – to verify with them that the billing address a customer has given actually matches the one that the card issuer has on file. You should know that your card issuer will not give you address out in response to these inquiries to protect your privacy. They will simply confirm with a simple yes or no whether the billing addresses match or not.

Another way merchants perform AVS is by using a third party software or a third party company. These results are not always as accurate though.

If the billing addresses do not match most merchants will then decline to accept the credit card you have entered as payment for the order. Therefore to avoid problems or false reports of suspicious activity that can resul6t in a hold being put on your credit card account you should always make sure that your credit card company has your correct, current address on file at all times. A quick phone call is all it usually takes to update your address if you move and it will save you these potential on-line payment problems.

Some merchants also choose to ship only to the verified billing address of a credit card. This is because a credit card thief may have access to ID documents as well, allowing them to enter the right billing address but then still get to get their hands on stolen goods by having them shipped to a different address (theirs).

If you really do need goods you buy on-line shipped to a different address and the merchant does not usually allow it a simple phone call to the merchant to explain the reason for the discrepancy may suffice but you may also have to resign yourself to having goods shipped to that single address only as a part of complying with an Internet merchants general policies.

Card Verification Number

An increasing number of on-line merchants are also requiring customers to enter their credit card’s card verification number during checkout as well as its number and expiration date. Every credit card has one of these numbers. On Visa, MasterCard and Discover credit cards they take the form of a three digit number printed at the end of the signature line on the back of the credit card. For American Express credit card holders things are a little different as the verification number is a four digit number printed on the front of the credit card.

This extra check is implemented to make sure that you, the customer, actually have the physical credit card in your hands. Internet fraudsters have developed a number of ways of obtaining credit card numbers and expiration dates of credit cards by merely watching credit card holders at store checkouts (including by taking photos with their cellphones or iPods) but getting that verification code, especially if it is located on the back of the card, is much harder.

IP Monitoring

On some Internet e commerce sites you may see a warning that your IP address is being logged. This is another way that Internet merchants try to improve the chances that they can catch and prevent online credit card fraud. By looking up a customer’s IP address merchants can gain access to basic location information (nothing exact or intrusive) that can help them validate a transaction to a certain extent.

For example if a credit cards billing address is located in New York City but the IP address matches a residential address in Arkansas then a savvy Internet merchant is going to want to investigate a little further before filling the order. Now this may be a little annoying if you are just trying to do a little Internet shopping while staying with an out of town friend or relative if your card has been compromised you would be very glad that the merchant has implemented this extra security safeguard.

Phone Verifications

Most online merchants realize that misunderstandings can occur when they implement these kinds of security procedures. For example if you are purchasing an expensive surprise gift for a member of your household asking to have it shipped to your office or place of work, instead of the home address that is the billing address for your credit card, is perfectly understandable. Or if you are purchasing something that is a gift for someone who lives far away from you that you ask that it be shipped right to their address makes sense too. This is why if an Internet merchant has a small doubt about the validity of a credit card transaction they will try to contact the consumer by phone before refusing the transaction outright.

If you do receive such a phone call (or email) from an Internet merchant try not to be too offended. Instead you may want to be appreciative of the fact that the company you are dealing with takes such great care to satisfy their customers and meet their needs while still trying to ensure that online fraud is not being committed.