Credit Card Fraud
Credit card fraud occurs when someone attempts to use software
generated or otherwise illegally obtained credit card numbers
to purchase a product or service. Some transaction processors
use a service called AVS (address verification service), which
matches the customer entered billing address and zip code to the
information on file at the credit card issuer. Although AVS is
a good first step to reducing credit card fraud, information is
readily available on the Internet on how to circumvent this service.
In addition to AVS, ChargeGateway uses a variety of additional
methods to reduce fraud.
- Our merchants have the ability to record known bad credit
card numbers and originating IP addresses in an online database.
This information can then be added to that stored by all other
online merchants creating a master database. When an attempt
is made to purchase goods or services using one of these credit
card numbers or originating from one of the listed IP addresses,
the customer is politely declined with a customizable message
to keep the door open for future orders. A sample message would
be, "We are sorry but we cannot process your purchase at
this time, please contact the vendor at xxx-xxx-xxxx (or email)
- Often when a credit card number is stolen or generated via
software, the expiry date and address information is not available.
In these cases a criminal will often retry transactions until
they can guess the missing information. We prevent this "churning"
of information. Three unsuccessful attempts with a specific
credit card number within a 24 hours period will result in that
number being added to our database and prohibited from future
- ChargeGateway records the customer IP address of all successful
transactions and stores this information correlated to the transaction
number and merchant involved. A customer making a purchase is
notified of this policy and their IP address is displayed for
them. This information can be used to track the origin of a
purchase and is a strong deterrent to fraud.
- We use two additional techniques for reducing credit card
fraud. The results of these two tests are then passed to the
merchant with the order. The merchant can then decide whether
or not to accept the order based on their selection criteria
and risk tolerance. For security reasons, details of these two
techniques will not be described here, but one of our account
managers would be pleased to discuss them with you.
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In most e-commerce applications, transaction processors accept
credit card billing information from a merchant web site, process
the transaction securely and then pass acceptance / denial information
back to the merchant. In some cases it may be possible for a criminal
to intercept or introduce information into the message stream
returned to the merchant to indicate that a transaction was successful
even though it may not have been processed at all or was declined.
ChargeGateway uses two sophisticated techniques to ensure that
this does not occur. Some transaction processors offer a web interface
for processing transactions manually. This is a useful feature
for completing partial refunds, returns or purchases. The transaction
engine resides on the processor's servers, but the software can
be accessed remotely via the Internet. The risk with this service
is that an unauthorized user who gains access to the merchant
password can process transactions without permission. We address
this concern by implementing a multi-tiered password system in
addition to IP address restrictions. In addition to knowing a
user ID and password, anyone wishing to use the web interface
would have to have a valid IP address as preselected by the merchant.
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Another leading, yet overlooked, cause of chargebacks is poor
merchant service and/or sub-standard products. Our staff has the
experience in the retail industry in both traditional bricks and
mortar as well as e-commerce so we understand your needs. Future
ChargeGateway products will act as enhancements to our transaction
processing services. These include customer feedback and survey
modules designed to increase the level of satisfaction the customer
experiences and to assist in identifying issues at a stage early
enough to rectify them.
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Credit card chargebacks cannot be eliminated but they can certainly
be reduced. Should you wish to review any of the issues raised
we would be happy to discuss them with you.
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