| Caution: MOTO (Mail Order/Telephone Order) Rule Transactions by merchants on the Net fall under the heading of MOTO. Most credit card merchant account agreements leave you, the merchant, 100% liable for fraud committed at your website.
Any person experienced in eCommerce knows that building an online business takes a lot of work. Nothing can be worse than seeing all your hard work lost through fraud, especially credit card fraud. Now you would think that your bank would protect you. Not so. Why doesn't your bank protect you against fraud? Because your merchant agreement says it can't. It's called the MOTO rule. If a credit charge is reversed by request from the card holder, your bank will hit you with a chargeback fee. If you accrue too many chargebacks, your merchant account can be terminated. After one is terminated, it's nearly impossible to get another merchant account. It's not a pretty prospect when you think about it. And knowing that it's pretty much guaranteed that you will experience an attempt to defraud you sooner or later darkens the picture even further. So to protect yourself, you should review each order for possible fraud before fulfilling it. So what should you look for when reviewing your order for fraud? Here are a few things to watch for: Larger order total than normal Shipping address different from the billing address Shipping to PO boxes Order requesting overnight shipment Multiple orders from the same credit card Multiple credit cards used by the same IP address Credit card does not match the AVS verification Multiple orders of the same item International orders
Here are some other things to keep in mind: Don't assume that merely verifying a credit cardgetting an authorization numberis sufficient fraud protection. The verification process checks two things. First, it checks whether the credit card has been reported stolen. Second, it checks whether the credit line has sufficient credit to fund the purchase. Your first level of fraud protection is AVS. AVS stands for Address Verification Service. But it has its limitations. AVS compares the billing address of the customer with the records held by the card issuer. If the card number and billing address match, AVS gives it a thumbs-up. The problem is that the card could still be stolen and a thief can ask that the order be shipped to another address. AVS has other problems too. AVS only works for addresses in the United States. So, if you have an international order, AVS will not help. If you sell software or information that can be downloaded instantly, AVS provides no protection. A thief with a valid billing address that corresponds to a stolen credit card number can cause the AVS system to give an instant approval and your instant buy becomes an instant fraud! If you don't use AVS, make sure the customer's billing address matches the shipping address. If it doesn't, ask the buyer why he or she wants the order shipped to another address. Ask for TWO phone numbers, work and home. Then do a telephone number search on suspected fraudulent orders. Let potential crooks know you check for fraud by notifying them with notices and images on your order forms. This also lets potential customers know that you are serious about fraud and fraudulent orders will turned over to the proper authorities. Look at the products being ordered. Does it match similar fraudulent orders you caught in the past? Be careful of big orders such as three MP3 players at once. If the customer demands overnight delivery, this too can be a sign of a fraudulent order. Since the scam artist isn't paying for it, he doesn't care how much it costs and he'll want to get it in a hurry. Look at the email address that is provided. Thieves try to hide their identity by using free email addresses such as the free email services of Hotmail, MSN, or Yahoo! Another clue is a suspicious billing address such as 123 Main Street. And finally, if someone places a very valuable order and asks that it be left at the front door, be suspicious. A thief may be using that address as a drop-off point. If an order is for a high-priced item, request that it be signed for.
Tip: Checking Addresses and Phone Numbers for Accuracy You can check to see whether an address is real by using Yahoo! Maps at maps.yahoo.com. You can also purchase a database of phone numbers on a CD or you can use services such as www.anywho.com or www.switchboard.com, where you can do a reverse search on a phone number. This will allow you to confirm the contact information for the phone number that the customer has provided.
Although your order may meet one or more of these criteria, it does not necessarily mean the order is fraudulent. But if you suspect fraud, follow these steps: | | 1. | Call the customer. Use the phone numbers you requested and collected from him. When you contact him, don't automatically assume that you're dealing with a thief. The customer could have entered incorrect information and you don't want to offend him and lose the sale. In general though, a thief will not want to have a long conversation with you.
| 2. | If the phone number is wrong, try contacting the customer via email for a valid phone number.
| 3. | If the billing address doesn't match or is incorrect, ask him to give it to you again. If the area code doesn't match the billing address's city, ask why.
| 4. | Ask the customer for the name and phone number of the establishment that issued the card. Both are printed on the back. If the customer cannot supply it, this is a sign that he doesn't physically have the card, just the number.
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If you still feel uncomfortable with an order even after talking to the customer, ask him for payment in advance. And if you're hit with a fraudulent order, document all contacts. This will give you greater protection and a better fighting chance of getting your money or product back. Remember it takes a lot of orders to replace just one order lost to fraud. So, it's better to pass on the ones that you're not 100% certain about. So follow these tips and protect your business. No one else will! Using Yahoo! Risk Tools to Prevent Future Fraud Orders So what should you do when the order is an actual fraudulent order? To help prevent additional fraudulent orders from the same person, Merchant Solutions has built-in risk tools such as the IP blocking tool. An IP address is a set of numbers unique to the computer that placed the order. It allows for communication between sender and receiver. You can block a specific IP address or a range of IP addresses. Although this will not guarantee that the same person will not attempt do it again from another computer, it will surely slow him down and hopefully make it not worth the trouble to try it again. Every order includes the IP address of the computer used to place the order, as seen in Figure 14.9. If the order is fraudulent, take the IP address displayed in the order and add it to the list of blocked IP addresses. Figure 14.9. Each order will include the IP address of the computer the customer used to place the order. 
To block an IP address 1. | In Store Manager, click on the Risk Tools under the order settings column.
| 2. | In the Risk Tools Manager, click on the IP Blocking link.
| 3. | Type the IP address or addresses you would like to block in the first column and then click on the Add button.
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For further investigation, you can also look up the IP address before adding it to the blocked list. Doing so will reveal the Internet service provider (ISP) the IP address belongs to. The ISP information is useful if you decide to contact the ISP for additional assistance or warning. |
