CNP Friendly Credit Card Fraud - How To Avoid Big Ticket Fraud
With the holidays around the corner, ecommerce merchants are sure to see a rise in “friendly” credit card fraud. After all, buying expensive, unaffordable gifts for our loved ones during holiday season, has become an essential part of our lives. Some online shoppers are very desperate and see no way out of “following the crowd” and unfortunately, turn to some dishonest alternatives. “Friendly” credit card fraud is when a rightful cardholder authorizes an online purchase to their credit card and later disputes the charges. They simply contact their credit card company and state that the charges were not authorized. In a card-not-present (CNP) environment, if the card holder is persistent with their false claims, they are sure to win – regardless of whatever “proof” the online merchant may have to back up the online transaction.
For the most part, customers with malicious intent pass through traditional fraud screening systems undetected. I have repeatedly heard merchants stating “I know this customer is legit and he is definitely using his own credit card”… only to receive a chargeback several weeks later. The bogus chargeback claims can vary from “the box was delivered empty”, “faulty merchandise”, “never received”, “unauthorized”, etc.”
While smaller ticket amounts are less likely to turn out as friendly fraud and harder to detect, use common sense when trying to detect malicious intent when the transaction amount exceeds the norm of a particular website. If you receive an order from a zip code where the median income is 20k and the item being purchased is a piece of jewelry for a whopping 15k, make sure that the purchaser has the means to afford it. Otherwise, there is a big chance of trouble. Also, pay attention to the the way the merchandise is being ordered. Remember, verifying that the credit card number is not a compromised number is NOT sufficient! You need to do some additional detective work for larger ticket amounts.