This article talks about a very important issue for Internet merchants . . . preventing online fraud. Most of the attention in the press surrounding online fraud is focused on consumers…whether its having their credit card numbers stolen by hackers or being suckered into giving their personal and financial information by a phony email phishing scam.
But barely any attention has been given to the other side of the coin…the Internet merchants who are defrauded by crooks posing as legitimate consumers.
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One of the first things you need to do as a merchant to prevent fraud is to always verify who the consumer is. On card-present transactions, this can easily be done by asking for a valid photo identification card, for example, a driver's license or state issued ID card. On card-not-present-transactions, this is a much more difficult task for the merchant to accomplish.
There are two basic steps that every online merchant should follow to ensure that the consumer is legitimate.
The first step in preventing fraud in a card-not present environment is called address verification or AVS. The consumer should be required to enter their billing address when they are filling out their credit card information.
The payment gateway will then send this information to the payment processor for verification. The payment processor will then pass the address information to the issuing bank who will then match that information with the address information they have on file for that card.