Credit Card Fraud and Foreign Orders

Online businesses should be weary of shipping large orders to foreign countries. Before shipping large foreign orders, take precautionary measures to ensure the validity of the transaction.

If you run an e-commerce web site, it's likely that at some point you will get an inquiry from someone overseas who is interested in purchasing a large volume of product. It is only natural to get excited when such an inquiry is made. After all, large orders are great for business, but you must beware.

Shipping large orders overseas is a huge gamble. If a chargeback is issued or the credit card used for payment is fraudulent, you will have little recourse and will be stuck paying for the lost merchandise as well as any chargeback fees. Some of the countries that you should be most weary of are:

• Nigeria
• Indonesia
• Ukraine
• Lithuania
• Bulgaria

Depending on your business type, refusing to send orders to these countries may not be the best course of action. Instead, learn how to recognize fraudulent orders, and then take precautionary measures before shipping the order just to be safe.

Some things to look for when trying to determine if a foreign order is fraudulent are:

• The customer is willing to pay excessive fees for express shipping.
• The order is for a large amount of merchandise
• It is difficult or impossible to contact the customer after the order is placed.
• Contact information supplied on the order is invalid
• The order is for items that are commonly at high-risk for fraud such as electronics, weapons, jewelry, or technology products.
• The products that the customer ordered are sporadic in nature, and are seemingly unrelated.
• The customer purchases a large amount of the same product in different variations such as size and/or color.

If none of these signs are evident, you may want to consider shipping the order after taking these precautionary measures.

Verify Billing Address - The address verification system (AVS) will not work on foreign orders, but it is possible to verify the billing address of a foreign credit card by calling the issuing bank of the card.

Contact The Customer - If an order is suspect, you should contact the customer prior to shipping any merchandise. Confirm the billing and shipping address with the customer to ensure that it matches. Pay attention to how the customer sounds. Are they eager, impatient, or suspicious? These may be signs of a fraudulent order.

Cross-Check IP Address - If you have the capability.... Check the customers billing/shipping address against the location of their IP Address to see if it matches. Of course, the customer can always say that they placed the order from work, the library, or a friend's house, and they may be telling the truth.

Verify Customer Identity - Verifying the identity of the customer is a solid way to lessen the risk of fraudulent transactions. Contact the customer and ask that they send verification of their identity. It is not uncommon for companies to request a copy of a customer's drivers license and the front and back of the credit card that they are using to make payment.

CVV/CVV2 - If you don't already have it, ask the customer for the CVV code from the back of their credit card and verify that it matches.

If you take all of the above steps and a customer still checks-out, chances are pretty good that the order is valid. However, if you still have doubts you should not ship the order.

Alternate Payment Method - A good way to ensure that you will be paid for a foreign order is to require a more secure method of payment in advance. If an order looks good, but you still have some doubts, ask the customer to provide a different (more secure) method of payment such as a bank/wire transfer or cashier's Check via Mail.

Unfortunately, there is no full-proof way to combat credit card fraud. There will always be those crafty thieves that will do their best to beat the system. Remember that common sense is your most valuable tool when combating credit card fraud. If an order looks suspicious you should investigate before shipping. Don't worry about offending the customer; any honest customer will understand your concern, and ultimately appreciate your thoroughness.