E-Commerce Blog

Authorize.Net, a CyberSource Solution, is a leading payment gateway company with many years experience in combating credit card fraud. We asked Roy Banks, President of Authorize.Net, about common errors that merchants make with fraud prevention.

PeC: What’s the biggest fraud-prevention mistake made by ecommerce merchants?

BANKS: Failure to use the Address Verification Service. It’s a free option from most payment gateway companies and will potentially lower a merchant’s processing costs when used. Unfortunately, many merchants don’t use it. Another common mistake is merchants don’t always require the card verification code from the cardholder at the time of sale. This is also a service that is free from most payment gateway providers. By using both AVS and Card Verification Code, merchants will be able to better detect and prevent thieves who attempt to purchase with a stolen credit card number.

PeC: Where can a merchant turn if he’s confused or has questions related to…

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Interview: Authorize.Net President On Fraud Prevention

Reports of website data breaches, identity theft and credit card fraud are increasingly in the news. But is the problem as widespread as the coverage suggests?

Anyone who collects payments or customer information online runs the risk of being targeted by thieves. However, the likelihood of being hit by a virtual shoplifter is statistically on the decline. Meanwhile, industry watchers say that rather than an influx of database hacking, it’s the new breach reporting laws, enacted in many states, which account for the recent surge in reported breach activity.

Indeed, merchants who maintain and regularly update their security procedures for credit-card data and processing seem to mitigate their risks. For now, let’s tackle this question: What is the scope of credit card-related fraud and the subsequent impact on an e-merchant?

In 2000, North American e-merchants lost an average 3.6 percent of their sales to stolen or fraudulent credit cards. In 2007, that figure was down to 1.4…

Originally posted here:
Credit Card Fraud: How Big Is The Problem?

A few insurance companies provide policies for credit card fraud and data breaches, covering both a merchant’s hard cost of fraudulent sales and any liability for data breaches. AIG, the publicly-traded insurance company, was one of the first.

AIG has offered Web Merchant Guard since 2001, a policy “designed for merchants that take card-not-present transactions and looking for catastrophic protection from online fraud,” says Mark Camillo, AVP for AIG’s Identity Theft and Fraud Group. “It’s not something that’s going to pay for the first dollar of loss, but it will pay for fraud that exceeds your normal level.”

The annual deductible for Web Merchant Guard is typically around 1 percent of a merchant’s total sales, with premiums of several thousand dollars per year. Three to six other insurance companies offer similar coverage.

“I don’t think small merchants are aware of the repercussions of fraud,” says Dan Clements, president of Card Cops, a website that gathers compromised…

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Insuring Against Fraud, Data Breaches

In Field Test, Practical eCommerce gathered ten seasoned ecommerce merchants and asked each of them the same questions around a given topic. This month?s topic is fraud prevention.

The participating ecommerce merchants are: Dave Norris, House of Antique Hardware; Chris Stump, Only Hammocks; Mike Feiman, PoolDawg; Dan Stewart, Xtreme Diesel Performance; Roman Kagan, Appliance Parts Pros; Cindy Barrileaux, Write Your Best; Claudette Cyr, Gear-Source; Mike Butler, Bloom Designs Nursery; Kristen Taylor, Juvie; Jeff Muchnik, RedBox Tools.

The responses for three of the ten merchants follow below. The answers are shown to preserve anonymity.

Pec: Has your ecommerce business been the victim of credit card fraud?

FIELD TESTER 4: In over eight years in business we haven’t had a single case of credit card fraud. While no company can claim to be 100 percent invincible, we try to utilize every option available to prevent fraudulent transactions.

FIELD TESTER 5: No.

FIELD…

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Field Test: Fraud Prevention, Part 2 of 3

In Field Test, Practical eCommerce gathered ten seasoned ecommerce merchants and asked each of them the same questions around a given topic. This month?s topic is fraud prevention.

The participating ecommerce merchants are: Dave Norris, House of Antique Hardware; Justin Hertz, MuttMart; Chris Stump, Only Hammocks; Mike Feiman, PoolDawg; Dan Stewart, Xtreme Diesel Performance; Roman Kagan, Appliance Parts Pros; Cindy Barrileaux, Write Your Best; Claudette Cyr, Gear-Source; Mike Butler, Bloom Designs Nursery; Kristen Taylor, Juvie; Jeff Muchnik, RedBox Tools.

The responses for three of the ten merchants follow below. The answers are shown to preserve anonymity.

Pec: Has your ecommerce business been the victim of credit card fraud?

FIELD TESTER 1: Attempted fraud, but nothing that ever actually went through.

FIELD TESTER 2: Hundreds of fraud attempts, but I think we actually only got stung once for a small amount.

FIELD TESTER 3: Yes, we typically see a handful of…

Excerpt from:
Field Test: Fraud Prevention, Part 1 of 3