The United States Small Business Administration discovered in late 2015 that half of the credit card fraud in the world took place in the U.S. In fact, some analysts predict that businesses will lose a collective $7.2 billion as a result of credit card fraud by 2020. Unfortunately, auto parts ecommerce shops aren’t immune to this widespread phenomenon.

stack of credit cards

Photo credit: Nick Youngson

How Does Credit Card Fraud Happen?

In a nutshell, credit card fraud happens when a scammer uses a fake or stolen credit card to purchase a big-ticket product or service from a business. Brick and mortar shops and ecommerce businesses fall victim to credit card fraud all the time. The sad truth is that scammers never stop cooking up new ways to pull the wool over unsuspecting eyes.

Thieves are starting to realize that it’s easier to pull off successful scams online than in person because they can hide behind a computer screen. That’s why ecommerce shop owners need to step up their anti-fraud game.

As the owner of an online auto parts shop, it’s important to understand the repercussions of making a big-ticket sale to a scammer. Everything may seem to go well in the beginning, but you’ll run into trouble days or weeks later. Not only will you be hit with a huge chargeback, but you’ll also lose merchandise, waste money on shipping, and be forced to pay your staff to sort out the situation.

Knowledge is power. Prevention is key. So let’s roll up our sleeves and combat credit card fraud together!

Suspicious Circumstances to Look Out For:

  • Unusually large online orders, in terms of dollar amount. The larger the order, the more likely the order is fraudulent.
  • A shipping address that doesn’t match a billing address
  • An overseas shipping address, or multiple shipping addresses
  • A sense of urgency – a request for unusually fast shipping, for example
  • Unusual email addresses with random letters or numbers
  • A request to split payment between several credit cards
  • An order coming from an IP address that doesn’t match the country in which the shipping address is located
  • Multiple transactions made with the same IP address, each with different address info
  • An order of more than one time that customers usually don’t need more than one of

credit cards over the phone

While anyone of these suspicious circumstances can be honest requests, it’s good to review any order that meets any of these criteria.

Additionally, there are some things ecommerce retailers can do to limit their fraud risk.

Tip #1: The Phone Is Your Friend

If you get an order that you feel may be suspicious, call the customer.

Ask them why their billing and shipping address don’t match. Ask them why they’re order two engine tuners, when most people only need one. Ask them if they can provide proof of their identity, by emailing a signed copy of their driver’s license. Ask them to confirm information about the card they used – card number, billing date, etc.

If they’re fraudsters, odds are good you can trip them up with a simple interview.

Tip #2: Ask For Verification

Many major credit card companies, including Visa, Discover, MasterCard, and American Express, offer verification services. All you have to do is call up the issuing bank and ask them to confirm the transaction. The bank will call the customer and ask them to verify the purchase.

Bonus tip: If you allow PayPal payments on your site, only accept payments from verified accounts.

Tip #3: Screen Every Order Over a Certain Dollar Amount

Many ecommerce retailers automatically screen orders over $500, as that’s the most they’re willing to lose to any one instance of fraud. Some will set this threshold a little lower ($300), and some will go much higher.

But whatever the right number is, it’s a good policy for limiting risk.

Tip #4: Formalize Your Review Process

website developer and security
Photo credit: Beatrice Murch

Often times, fraud occurs when a new or inexperienced employee helps out with order fulfillment. They don’t know about fraud, they don’t recognize the signs, and they fill an order that should have been reviewed first.

One solution: Don’t let anyone fill an order without following a simple checklist. Checklists are great for fighting fraud, as well as ensuring accurate order fulfillment.

Tip #5: Bring Your eCommerce Shop Up to PCI Standards

The Payment Card Industry (PCI) has rigorous standards in place to ensure the secure trading of financial information online. Not only will these standards help protect you from credit card fraud, but they will also give your legitimate customers the peace of mind that their credit card information is safe with you.

The PCI’s website has a lot of information on bringing your website up to their standards.

You don’t have to do this manually, though. You can connect your ecommerce shop to a credit card processor that meets all of PCI’s standards. Our credit card processor is a good example. One of our partners is FORTIS Payment Systems, who not only meet PCI standards (and then some), but also monitor your account and will immediately alert you of any suspicious activity.

© 2016 RPMWare Inc. All rights reserved.
Terms of Service