4 Useful Ways To Detect Credit Card Fraud

By: Gen Wright


There are five types of credit card frauds, that is, fake credit card, stolen or lost credit card, non-receipt fraud, no-card fraud and also identity theft fraud. No-card fraud occurs when customers give out their credit card information to a fraudulent company over the phone or through the Internet that sell non-existent goods or services. On the other hand, non-receipt fraud happens when new cards mailed by the issuing company are stolen when being mailed.

Anti-fraud measures can combine a few tests to work out the chances of a transaction being fraudulent, through address check, Card Verification Number, IP geo-location, buying pattern, purchase history, black and white lists, third-party identity checks and manual review. Geo-location can help reveal spammers and hackers, whereas device fingerprinting traces and pinpoints devices used in fraudulent transactions, in combination with velocity check to generate a warning in cases of multiple transactions in a short period of time and global address validation verifies billing and shipping addresses is a powerful way of protecting dealers from frauds.

So, how is credit card fraud tracked? Here, we'll be discussing four very useful ways to detect credit card fraud.

As said, geo-location is one of the means to check credit card fraud by determining the location of the user and calculating the distance between the billing address and site where purchase was made. This allows merchants to take preventive measures and additional authentication from the customer to ascertain which is legitimate.

Secondly, credit card fraud detection can be done by comparing the IP address country and the credit card issuing bank's country with the country of the billing address. An alert for credit card fraud should be initiated whenever orders are made in areas prone to frauds. Merchants need to be extra careful and assess orders closely before making deals to such areas to avoid frauds.

If still in doubt of check credit card fraud, it is better to request for more identification and authentication from the user. Calling up the customer at the same time helps to verify whether the phone number is authentic and located within the correct ZIP code. Besides this, merchants can phone up the credit card issuing bank to obtain general account information if suspicious of any transaction to obtain confirmation and make sure the card is not stolen. The bank's phone number is based on BIN, the first six digits of a credit card number.

Other ways of detecting credit card fraud include checking if a free or anonymous e-mail address is used. This is especially true if the domain names are newly registered because fraudsters can easily get a new domain to act as a new business unit. Anonymous proxy servers allows Internet users to hide their real IP addresses, thus this can be used as a method to track credit card fraud.

Merchants should be familiarised with the customers buying patterns, and using other detection services available, to be alert of any unusual purchase pattern to track credit card fraud and take immediate action to stop any transaction if the merchant suspects credit card fraud. Using credit card fraud detection systems such as can help lower credit card frauds from happening.

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For more information on how you as a business entity can protect against such like losses check out detecting credit card fraud or how to detect credit card fraud.

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