After the release of my article, Credit Card Verifications, Part I, it became evident there are many issues surrounding merchant accounts and credit card fraud that remain unanswered for many of you. Credit card fraud is obviously a broad topic, but one of great concern. The first article provides an in-depth discussion of how you can protect yourself against credit card fraud. If you did not read that article, you can find it at http://www.jewelryimpressions.com/fraudart.html. In this article, I’d like to answer some of the more frequently asked questions that many of you asked me following the release of the first article.
Is There A Fee Assessed For Chargebacks?
In most cases, the answer to this question is a resounding YES! If there is one reason why you should be diligent about verifying all the cardholder’s information on each transaction made on your site, let this be the one. Regardless of the reason for the chargeback, you will be assessed a fee ranging from $10 to $35 for each chargeback you receive. In other words, if you have the misfortune of becoming a victim of credit card fraud, not only will you be responsible for the full dollar amount of the purchase, but you will also be charged a $10 to $25 fee for having the chargeback. Be sure to ask your merchant provider what their chargeback fee is so you can keep this in mind when developing your company’s policy on verifying purchases.
You should know that even if you’ve credited the card before you receive the chargeback notice, you will still be assessed the fee. I learned this the hard way many years ago when I was trying to notify a cardholder of a fraudulent purchase attempt. I knew the purchase was fraud so I didn’t send the product. As always, I wanted to notify the customer of the crook’s identity and the address to where the purchase was to be sent. Unfortunately, the phone number the cardholder had on file with his issuing bank was disconnected. Without a valid phone number to call him, and by voiding the transaction, he would have no way of knowing about the purchase attempt…and another crook would get away with a crime. So I opted to keep the transaction open long enough for the cardholder to notice it on his bill and contact me. When I didn’t hear from him, I decided to credit his card for the amount of the purchase. Although I issued the credit before I received the chargeback notice from my merchant provider, my good intentions cost me $15!
You should also know that even if a chargeback was a mistake on the part of the customer, you will still be assessed the fee. In other words, if a customer does not recognize your company name on their bill and they decide to dispute the charge, you will be charged the fee even if the purchase was legitimate and the chargeback was settled between you and the customer.
For this reason, it’s important make sure your customers know the name of your company as it appears on their billing statement. If you’re not sure how your name is printing on your customers’ billing statements, call your merchant provider or place an order on your own website with your personal credit card. Have the information changed if you believe it is causing confusion among your customers.
How Do I Get AVS Response Code Information If I’m Not Currently Receiving It?
There are several ways you can access address verification information to make an informed decision about whether or not you should fulfill an order. The method of how you do so depends on the capabilities of the system you use for accepting credit cards.
If you’re using an online real-time authorization system such as Authorize.net, you can contact the company from which you purchased the system for instructions on how to configure your account to provide you with the AVS response code information.
If you are using a punch key terminal to enter credit card transactions, your equipment may have the ability to provide an AVS response code for each transaction, even if it’s not currently providing it. Some punch key terminals are programmable to accept address information for verification purposes. Contact your equipment provider for more information on your equipment capabilities.
If your current system is not capable of providing AVS response codes, then you can always get address verification over the phone from the cardholder’s issuing bank for Visa & MasterCard purchases. You can get full name, address and phone number verification for Discover and American Express purchases by calling them directly. Have your merchant number and the number of the credit card in question ready to give to the person helping you.
Remember, when calling for verification, make certain you verify the cardholder’s name, address AND phone number.
I can’t seem to get through to a person at the cardholder’s issuing bank. How can I find someone to verify the address information?
Unfortunately, the phone systems at many issuing banks aren’t very merchant friendly. Very few have an official option for merchants calling to verify cardholder information. But don’t give up, try as many things as possible to get through to a person. The first thing I try when an address verification option is not available is to dial "0" in the hope of reaching an operator.
When this option fails, pretend you are the cardholder and follow the prompts for account information. You’ll need to enter the account number, sometimes the expiration date and most often the system will ask you for the last four digits of your social security number. Obviously, you won’t have this information, so you simply enter four random digits. The system will likely ask you to re-enter the correct numbers…keep entering four random digits until the system finally transfers you to a person. Usually this will happen after just two or three attempts at entering incorrect information.
When a person answers the phone, tell them you are a merchant calling for address verification. I’ve never had a problem obtaining the address verification this way. Be persistent and don’t give up until you reach a person. Believe me, you’ll be glad you did, and so will the cardholder. Again, even if everything matches but the phone number, ask the bank to do a courtesy call to the customer to verify the purchase. Follow your gut instinct on questionable purchases.
How can I verify international transactions made on my site?
Because I own a US company, I am writing this article from an American’s perspective. It is very easy to get proper address verification for US purchases within the States by following the instructions I have provided. But it’s another challenge to get verification for non-US cards.
While most payment gateways accept payment from non-US cards and provide an approval or declined notification, many do not currently have the capability of providing AVS response codes for most non-US cards.
American Express does have an international department established for verifying overseas credit card transactions. Therefore, foreign purchases made on American Express cards can be easily verified by calling American Express and asking for their international verification department.
Discover Card is not currently being issued internationally, so all Discover Card purchases are made with US cards. If a purchase was made with a non-US MasterCard or Visa, you need to determine for yourself whether the purchase warrants making a long-distance phone call to actually verify the cardholder's information. If you call your merchant provider directly regarding a non-US card purchase, they may provide you with the issuing bank’s phone number, just as they do with US card purchases. Then it’s up to you to make the long distance phone call.
I use Net2Phone to call any phone in the world from my Internet connection at a fraction of the cost of a normal phone call. Now I can properly verify non-US cards at a reasonable expense. For example, I recently received a sizeable order from Denmark. The purchase seemed legitimate, but to be sure I wanted to verify the cardholder’s information before shipping the product. I got the cardholder’s issuing bank phone number and was able to call Denmark directly for just .10 per minute!
For those of you who own non-US businesses, Net2Phone makes it easy for you to verify US purchases because you can call most 800, 888 or 877 numbers from anywhere in the world on Net2Phone at no charge. For more information on Net2Phone, visit http://www.net2phone.com.
When a non-US order is difficult to verify by phone, we simply ask the customer to provide us with a scan or fax of both sides of the credit card and a photo ID. This is nothing more than what a brick and mortar merchant can see if the customer was standing right in front of him. Most non-US customers understand this may be necessary and are happy to cooperate. For those who don't, you may simply want to void the transaction. That's up to you.
What red flags should I look for to help me identify fraudulent purchases?
In my last article, I cited several red flags to look for when trying to identify whether or not a purchase is legitimate. Again things to look for are:
Remember, if you recognize any or a combination of these red flags, call for full verification on the purchase. If it is an attempt at fraud, try to notify the cardholder and report the crime to the police. You may even send copies of the transaction to the e-mail provider of the crook. I’ve had good success at reporting criminals using AOL e-mail addresses. AOL has a department specifically for issues of fraud. If a crook using an AOL e-mail address attempts fraud on your site, call AOL directly at 1-888-265-8003 to report it.
What should I do if my card number is stolen?
If your card is stolen, immediately report it to your issuing bank. They will put a stop on the account so no further purchases can be made. Then ask for a list of the most recent purchases made with your card and attempt to contact the merchants from whom questionable purchases were made. There still may be a chance of stopping the shipment of the product. Trust me when I say that the merchant is USUALLY an innocent party to the fraud and would appreciate the opportunity to recover the merchandise or stop the shipment if at all possible.
Finally, I have to stress again the importance of assisting in stopping this crime. If your card is stolen and being used to make fraudulent purchases, this is a CRIME, even if none of the purchases go through successfully. Please report the crime to your local police department and work with the merchants to help catch the crook. Nothing is more annoying than the apathetic attitudes I sometimes get from cardholders when I try to convince them to follow up on a credit card fraud case. We need to stop encouraging this crime by our do-nothing attitudes and start reporting it to the authorities.
To read other articles written by Michelle Rahm or to learn how to feature this article on your website, please visit http://www.jewelryimpressions.com/articles.html
Contact Michelle at 970-535-4139 to speak at your next event.