It is not possible for you to avoid fraud or chargebacks completely. However, the following tips and procedures could help you reduce the number of retrieval requests and chargebacks you may receive.
Your website should display the following information:
You should retain documentary evidence of the delivery, together with a description of the goods/services supplied, for a minimum of 12 months. Do not despatch goods by whatever means (including online delivery) to a third party address (that is, an address other than the cardholder's address) - this is considered to pose a higher risk of fraud. When delivering the goods, obtain the cardholder's signature to show proof of delivery. If possible, take an imprint of the card at this point.
You should ensure that:
You can refund a transaction. However, once you receive an RFI or a chargeback, it is too late to refund the transaction. If you do so you risk losing the money twice. It is also contrary to of card scheme rules to issue a refund for a transaction that has entered the retrieval and chargeback system.
We would highly recommend that you refund any transaction flagged by the issuer as 'High Risk' to reduce the chance that a subsequent chargeback will be issued.
Often, the most effective tool against transaction fraud is to review each transaction manually. The following unusual circumstances may indicate a transaction fraud:
There are a number of things that you can do to reduce your risk.
Require that the customer send you a signed fax, preferably with a photocopy of the front and back of the card, so that you can check the signature. Your website should allow the user to automatically print the order form, so it only needs to be printed out and sent.
Arrange for the customer set up an account first and either check with the issuing bank of the credit card that the provided address is correct, or have the customer fax a copy of their latest credit card statement and/or passport/driving licence.
Verify the use of the credit card to the customer's actual postal address by other means than email, such as a letter, phone call, fax, or SMS message, to reduce the level of fraud risk.
Implement a rule-based order-checking system to eliminate typical scams from your web site.
Use AVS or a third-party address-checking system (e.g., Equifax, 192.com) to ensure the customer's address is verified. Avoid shipping to an address different from the billing address.
Do not despatch goods by whatever means (including online delivery) to a third-party address (that is, an address other than the cardholder's address).
If you must send goods to a shipping address that is different from the mailing address associated to the consumer's credit card, we suggest that you call the consumer and have them fax a copy of at least one bill from the address, or a copy of the driver's licence of someone who lives at address that was provided. We recommend that you never ship to P.O boxes.
Check each transaction against previous transactions for a given credit card and check for any anomalies.
Avoid shipping to countries such as those with known high levels of fraud.
When delivering goods, obtain the cardholder's signature to show proof of delivery. If possible, take an imprint of the card at this point.
Retain documentary evidence of the delivery, together with a description of the goods/services supplied, for a minimum of 12 months.
The Chargeback and Anti-Fraud Guide will give you an overview of what chargebacks are and how to protect yourself against fraud.
Download the Chargeback and Anti-Fraud Guide (PDF 154 KB)