Managing Risk
& Exposure to Fraud — Prevention, Detection, Monitoring & Control

As e-commerce markets expand and merchants
realise their potential by expanding into new markets and countries, the
necessity to adopt a more risk based approach to selling online, has become
more prevalent with the threat of online fraud.

Fraudsters have become increasingly sophisticated in obtaining
personal data to commit acts of fraud and obtain customer information. These
attacks undermine merchant businesses and directly impact both the customer and
the retailer.

Implementing fraud strategies and managing chargebacks
effectively within your organisation will ultimately safeguard you and your
customers and limit your exposure to losses as a result of fraud.

To assist you in the fight against fraud we have provided some
tips you can adopt to manage risk and chargebacks within your business.

Merchant Tips to Fight Online Fraud

Merchant Solutions recommends a number of strategies that merchants can use to help limit exposure to Fraud and to develop an all-encompassing protection approach.

The key to managing risk and fighting fraudsters is to build
prevention, detection and monitoring controls into your business.


Only the individual merchant can determine which procedures to
implement in order to maintain a correct balance between fighting fraud and
accepting credit cards from legitimate customers.

  • Physical address – Physical address must match the credit card
    billing address.
  • Shipping address – This must be in the same area as the record
    of the customer’s address. This is an indicator and cannot be considered as
    suspicious in all cases where gifts are purchased
  • E-mail address – E-mail addresses which have no apparent
    connection to the customer’s name or include random characters could be
    potential attempts to mask identity but again, this is an indicator.
  • Repeated attempts – Repeated attempts on the same card number
  • must be treated as suspicious.
  • Monitoring

  • Control employee access to financial systems.
  • Analyse customer behaviour and activity so as to understand your business risk indicators.
  • Work closely with your business partners in understanding how you can leverage fraud control to best suit your business model.
  • Have the relevant Security and Fraud policies required to maintain a risk based framework within your company.

Why You May Have
Received a Chargeback

Understanding the reasons behind claims from your customers can
help identify the main cause and provide you with valuable information on where
you need to make changes or consider adopting a new approach within your business.
This helps to reduce chargebacks but also saves valuable time and customer
service resource.

Possible reasons for chargebacks include:

  • Customer did not receive a product or service
  • Customer does not recognise the charge or business name on their
    card statement
  • Customer believes the product or service was defective, damaged
    or not as it was described
  • Customer was a victim of fraud; card was stolen or used without
  • Customer refund was not processed in a timely manner

Avoiding and Managing

The best approach to prevent chargebacks is to create best
practices that are followed consistently by all employees. For example, always
process a refund back to the original card number in a timely manner.

Chargebacks can cost you time and money – but it’s important to remember that many chargebacks can be prevented and quite often, it begins with comprehensive employee training.

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