Credit Card Fraud: How to Protect Your Business

More people than ever are shopping online, using their credit cards to buy everything from business and consumer products and services.

That's great news for small and big ecommerce sites alike. More people using their credit cards to buy more gifts, should mean more profits for most online businesses if they aren't victims of credit card fraud.

Credit card fraud, unfortunately, can quickly turn a prosperous holiday season into a nightmare for a small business. The owner of a small mail order business located in California had to borrow from friends and family to make good on $14,000 worth of fraudulent charges made on stolen cards one year. The following year, the owner implemented procedures to screen out possible fraudulent orders and refused to ship $25,000 in orders that seemed suspicious.

Spotting fraudulent orders

Fortunately, if you sell online or over the telephone there are a number of steps you can take to minimize the occurrence of fraud.

First and foremost, be on the look out for suspicious sales. These include:

*Unusually large orders placed through the Internet without any contact from the customer.

*Rush orders for large quantities or high-priced goods. Crooks may ask to have an order shipped overnight so they know exactly what day the order will arrive and they can be waiting to pick it up.

*Missing information, or information the customer refuses to give such as a day-time phone number.

*Orders that are shipped to a different address than the billing address.

*Orders from foreign countries

*Orders on US cards shipped to foreign countries

*Billing addresses that don't match the information on file with the credit card company.

By themselves, no one of these things are a sure sign that a credit card is stolen, but when several factors are present (say, your average ticket amount is $75 and you see an rush order for $5,000 being shipped to a different address than the address of the credit card holder) it's prudent to be suspicious and investigate the sale.

Even if there's only one factor that doesn't pass your "sniff" test, it's useful to err on the cautious side.

by Janet Attard, Founder of the award-winning "Business Know How" small businessweb site and information resource.