Merchants operating in high-risk card-not-present industries, such as the eCommerce, mail order and telephone order (MO/TO), need to set up internal procedures for sorting out transactions with high potential for being fraudulent. Once merchants identify that certain transactions are suspicious, they need to have established cost-effective thresholds for determining which transactions to review. Reviewing all transactions manually is both time-consuming and costly and is generally justified only for high-risk transactions. To ensure that your transaction review costs remain lower than the potential losses from suspect transactions, you should consider implementing the following procedures:

Implement card-not-present transaction screening that lets you avoid the manual reviews of low-risk transactions. Criteria that you can use in your transaction screening procedures can include:
Low transaction amounts. If the cost of reviewing the suspicious transaction equals or is not much lower than the transaction amount itself, it does not make much sense to subject it to a review.
Repeat customers that have a good record for at least the past 90 days and merchandise has been shipped to their address before. Even if the transaction displays certain high-risk characteristics, the customer’s good history serves as a proof that he or she can be trusted.
An Address Verification Service (AVS) match and a shipping address that is the same as the billing address, in addition to a purchase amount that is below the established dollar threshold.

Make sure that all transactions that display high-risk characteristics are declined or routed for fraud review. Such transactions should include:

Transactions that match information in your internal negative file.
Transactions from international IP addresses.
International billing or shipping addresses.

Merchant Services

eCommerce Payment Solutions

Share This Post
105 views