If you're an online business, then probably you've been introduced to the underground of e-commerce: Online Fraud. This article lists the best ways to prevent fraudulent transactions.
You have this great product, you advertised it well, and you revamped part of your website just to accommodate this particular product. Transactions begin to flying in and you're quite thrilled. A few weeks later, you suddenly start dealing with a major waste of time and money: chargebacks and/or returned checks.
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You discovered that the reason for chargebacks/returned checks was that the credit card/bank account was compromised. The only solution that you have is to return the money and to forget about the product that you probably shipped (in case of a physical product). You ignored online fraud, you learned your lesson, but now what?
Worry no more, here is a small checklist that you can implement to prevent fraudulent transactions:
1. Never allow direct debit transactions on your site: Direct debit, a simple technique where you can just debit any account (mainly in the US & Canada) by simply knowing the account # and the routing # is more susceptible to fraud than any other type of online transaction.
Think about it, you just have to know the account # and the routing # of a person just to debit his account, you don't even have to know his name, his address, or anything else for that matter, just his account # and routing #. Payment gateways only check for these 2 and ignore all the other information that they receive about this account (including the name and the address).
2. Don't use AVS, use CVV: AVS is extremely unreliable and at many times there's no verification against it. On the other hand, CVV is very reliable, as usual, the person purchasing has to have a credit card on hand in order to make the purchase. However, always ask for the full address of the person, you might need it in case you are suspecting fraud.