If your business sells online, it’s great to be informed on powerful e-commerce trends. One is explosive growth in e-commerce, and the other is a potential shift in the types of credit card fraud.
With the switch to chip-enabled credit cards in the U.S. at retailers, it’s becoming more difficult for thieves to create counterfeit plastic using stolen credit card numbers. But, scammers may turn their attention to another type of fraud—using stolen numbers to purchase goods online. Also known as “card not present” fraud, online credit card fraud increased 79 percent in the first three years after the United Kingdom switched to chip cards. Industry experts are concerned the same trend could occur here in the U.S.
Fraud eats away at your business’s bottom line – and could scare away customers and potential customers. Being alert and proactive in securing your business’s e-commerce will help you delight your customers and protect your business.
E-commerce, everyone’s doing it
Businesses large and small are embracing online sales, with good reason. In 2015, online sales hit $341.7 billion, a 14.6% increase over the previous year. Some estimate that e-commerce will reach $440.4 billion in 2017.
That means there’s huge opportunity for small businesses to compete online. If you want your piece of the online pie, you should consider accepting credit cards for online orders. But chip-enabled cards don’t deter fraud if the card isn’t physically present. This leaves you as a business owner in a bind; you probably accept chip cards at your storefront, which protects your business from fraudulent activity, but online it’s like the Wild West.
Fortunately, you have ways to help protect your business from online credit card fraud:
1. Always get the security code
The security code is a three-digit number on the back of Visa® and MasterCard® cards. On American Express® cards, it’s a four-digit number on the front. Requiring a customer to enter their security code will help deter criminals from attempting to make fraudulent purchases, because chances are they don’t have the security code.
2. Verify the billing address
Your payment processor should offer some kind of address verification service to help ensure goods are being shipped to a legitimate address. Pay special attention if the billing address differs from the address where the order is being shipped to. Having different addresses is often legitimate (for example, when customers want something shipped as a gift or sent to their workplace instead of home).
But to be safe, check with the card issuer to see if the phone number provided is the same as the one associated with the cardholder. A different phone number could be an indication that a fraudulent transaction is occurring.
3. Require a signature on large or expensive orders
Thieves are probably unlikely to want to sign for purchases. It’s also good business practice to ensure that legitimate sales are delivered properly, so this is a win-win.
4. Be aware of unusual buying patterns
One red flag that might indicate card-not-present fraud is multiple orders all going to the same address, bought with different credit card numbers. Another is multiple orders going to different addresses, but using the same credit card. Also be wary if the order includes several of the same item, such as multiple DVD players or pieces of expensive jewelry.
If you notice buying patterns like this, contact the credit card issuer. Ask them to call the cardholder to verify that the orders are legitimate. This small step will let customers know that you’re proactive in protecting their information. This is a great business practice, but also helps differentiate your business from the millions of other e-commerce retailers.
We’re here to help you succeed
With a range of business products and services, we’re dedicated to helping your business grow and prosper. Security is always a concern in today’s digital world, so doing what you can to protect your business and your customers will ultimately be worth the investment. To learn about our merchant services that’ll help you fight card-not-present fraud, check out our merchant services partners.
You can also explore more small business resources at NavyFederal.org.