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Simple tools for fraud screening

Posted by Michael Bloch in ecommerce (Wednesday June 21, 2006 )

Another one bites the dust – yet another fraudulent order from Vietnam. The order had passed AVS (Address Verification Service), but the IP address seemed a little odd. The billing details indicated New York, but the IP was California – and even that was most likely spoofed.

A further check on the domain name indicated in the order was that it was a Vietnamese word. Bang.. you’re out of there buddy.

Dealing with spammers, scammers and fraudsters is an unfortunate aspect of life on the web, especially if you’re an online business owner – but there’s not much choice, you can’t just ignore it and hope it will go away.

Aside from the chargeback fees, ethics and personal responsibility aspects of not screening for fraud, if you wind up with too many chargebacks occuring in your online business, you risk higher transaction fees from your processor – perhaps even having your merchant account arrangement terminated. Once you’re tarred with that brush, it’s very hard to wash off – your tarnished reputation will follow you.

An ounce of prevention is definitely worth a pound of cure when it comes to fraud screening, and it really doesn’t take all that long to do. It doesn’t have to involve fancy tools if you don’t have the budget for that sort of weaponry.

AVS features provided by payment gateway services are good, but really only a first line of defense. AVS simply compares the address on the order with the details on file with the card issuer. Plenty of fraudsters have access to the correct card details, so if you rely on that alone you can probably expect plenty of chargebacks; *especially* if your AVS settings are such that they still allow mismatches through. Many merchants don’t realize that they are usually able to set different AVS screening levels via their payment gateway admin interface.

CVV2 takes things a step further. A CVV2 number are three last digits located on the back of a credit card, or the four stand-alone digits on the front of an Amex card. Still, fraudsters can get hold of this information and it’s important not to rely on this alone either.

An invaluable free tool I use for fraud screening is DNSStuff – it’s an online suite of network tools where you can trace IP’s, domain name registration details, check up on domains to see if they are a free email service provider and all sorts of other goodies.

Coupled with some of the strategies I outline in my article on fraud screening and minimizing chargebacks, I think you’ll find DNSStuff a very useful service in minimizing your chargebacks and loss of profits to scumbag fraudsters.


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