When dealing with e-commerce, merchants face an entirely new set of unique issues, in addition to the responsibilities of managing a physical location. When business owners start offering payment processing online, they often forget one of the most integral parts of shopping online: security. Far too many consumers fall victim to credit card fraud after making online purchases.
Credit card fraud is not only devastating to the customer’s credit and financial well-being, it tarnishes the reputation of the merchant and can leave them subject to expensive legal prosecution. It goes without saying that many online merchants want to avoid this type of outcome! To prevent such disastrous circumstances, there are a number of precautions that can be taken in order to reduce credit card fraud.
One of the most obvious signs of fraud is location. If the billing address for a credit card is in Texas, but the IP address of the computer user is located in Kyrgyzstan, it is highly unlikely that the user is the real owner of the card! Simply implementing a geolocation tool to pinpoint the buyer’s distance from the credit card billing address can deter a great deal of fraud attempts.
Proxy and Email Checking
Credit card fraud always requires some kind of anonymity. Someone making a fraudulent purchase, on occasion, is smart enough to not reveal their own IP address or use their own email account to make the purchase. Free and anonymous email addresses are commonly used for this purpose. Anonymous proxies can also be used for this purpose, as they can be used to hide a person’s IP address. Particularly careful credit card thieves will purchase their wares through an anonymous proxy online. If you use a server that checks for anonymous proxies and free or anonymous email accounts, you will stop a significant number of fraud attempts in their tracks.
Encrypt, Don’t Store, and Mask
The safest way to avoid credit card fraud is to require that all transactions online are encrypted and routed through SSL. Multiple layers of encryption will protect data while it is being exchanged. Also, it is highly recommended that you do NOT store credit card information unless you have professional-grade, layered, federally approved encryption. Certain types of data, like CVV2 security codes, are actually illegal to store! All a hacker needs is one back door left open, and countless consumers can have their information compromised or stolen.
Robust online security is key, especially when dealing with money. Finally, be sure to mask your credit card numbers when sending confirmation emails, creating shipping labels, and even confirming the order. The most common way to do this is to mask out the entire credit card number except for the last four digits.
Credit card processing is not without its risks. If credit card data is compromised or stolen, it can be devastating to both the merchant and the consumer. However, when the proper precautions are taken, fraud can be significantly reduced. Make sure your business is protected so that fraud does not happen– and if does, you are prepared. If you need help getting your e-commerce business off the ground contact us at Switch Commerce today.