It’s not easy for online businesses to operate with all the scams and frauds going around. However, many online businesses have been successful in countering such risks by employing strict security measures. There are e-commerce businesses that use automated risk mitigation systems in order to bring down the losses due to frauds to below 1% of the overall sales and this has resulted in their businesses becoming much more profitable. It is always important to keep in mind that scammers tend to be smart but they are usually not quick enough.
Here are some tips that online businesses should follow to avoid fraud:
Keep an Eye on the Payment Methods
Online retailers need to be aware of the pros and cons of different types of payment methods for their businesses. Take the example of regular credit cards which typically favor cardholders when it comes to disputes. However, credit cards remain the most frequently used payment method and this is why, businesses also need to consider the customer convenience when it comes to choosing payment methods.
On the other hand, PayPal presents a more friendly option for merchants and it also offers advanced features for scam protection. In addition, it also has advanced machine learning capability that helps in mitigating scam risk. Having said that, you also need to keep in mind that PayPal also allows charge-backs which means it isn’t completely foolproof.
Another popular payment method these days is crypto currencies and the block chain technology that makes crypto currency possible also makes it almost impossible for buyers to get forced refunds. Also, customers cannot deny a transaction as all the transactions are properly recorded. However, there is also the downside of crypto as these are quite volatile which means what the crypto currency is worth today might not be true the next day.
CVV2 Card Verification
Know your client checks, if you allow buyers to make payments with credit and debit cards, it is recommended to incorporate use of this system in your payment page. It is a 3 digit code that is present on the back of each card. This information isn’t there on the magnetic strip of the card which means making a transaction with duplicated or forged cards is extremely difficult when you use this verification code.
These codes present another safety protocol for merchants. With the help of this code, it is easy to verify whether the billing address given by the customer matches with their address on file. Having a different address than the one on file isn’t necessarily a scam attempt but it allows you to be more careful when this happens.
Modern Fraud Prevention Systems
The innovation in technology has given rise to some unique scams but technology also provides tools to mitigate such risks. The modern systems for fraud prevention include manual searches and checks as well as automated fraud prevention systems that use AI. There are many 3rd party software providers that offer a number of scam prevention options such as background checks, document verification and real-time identity verification, among other things. You should make use of all these modern day systems to prevent fraud. There are also digital KYC services that are mostly foolproof. The digital KYC can be extremely helpful for you to present a proof of purchase in case someone tries to make a false charge back.
It has been a recent development which adds a layer of security and confirmation to minimize the fraud -related incidents. This technology includes 3 domains which is what gives it the name 3-D. The first domain belongs to the acquirer representing the bank and the merchant who is getting paid. The 2nd domain belongs to the issuer which represents the bank that has issued the debit or credit card being used. The 3rd domain is the interoperability domain which represents the infrastructure related to the card whether it is debit, credit, prepaid or other type of finance card. It could be a telecom or Internet service provider. In such cases, it is possible to send a code to the registered cell phone number of the customer and the customer is required to enter that code on the payment page in order to go ahead with the online transaction.
It’s an old method but still remains one of the most effective methods to prevent frauds. It is recommended to make the customer provide their phone number along with other details. You should call the number provided by the customer to ensure that the number is legitimate and to check whether the number belongs to the customer.
Use Common Sense
Online vendors need to be on the lookout for things that seem out of the ordinary. If there is anything that makes you think that something doesn’t add up, you need to give it proper attention instead of ignoring it. In short, make sure to perform a thorough check if things seem out of the ordinary.
Learn to Say No
You might want to say yes to every customer but it’s important to use common sense to say no to certain transactions. If the information and credentials provided by a buyer seem to present a threat, it is important to deny their transaction otherwise you will lose a lot more money as you would lose the product and the money through charge-backs.