Save Money Prevent Fraud
Internet and Mail/Telephone Order Merchant Tips And Tricks

By Keith Friedman

For Internet or mail/telephone order (MOTO) merchants, credit card acceptance is paramount to your success. But success means dramatically reducing your exposure to fraudulent cardholder activity. How can you protect yourself from cardholders whose intent it is to defraud you? Following are some suggestions. Though we cannot guarantee any means for eliminating all cardholder fraud, close attention to these guidelines is the most effective way of significantly reducing the likelihood that you will be exposed

Obtain a Signature! Perhaps the chief reason that the chargeback ratio is higher for Internet and MOTO merchants is their inherent inability to obtain a signature at the time the transaction occurs. Finding a means of obtaining a cardholder's signature is an excellent way to link the sale to that cardholder and help to mitigate a dispute that may otherwise lead to a chargeback. For example, if you're shipping hard goods ordered via Internet or MOTO, include with the shipment a return-postage-paid acknowledgement of receipt-of-merchandise, to be signed and returned.

Use AVS and Caller ID! These services allow MOTO merchants to identify possible, questionable activity. If AVS does not match the street address and the zip code, then you should not process the transaction until you have done some additional research Caller ID may help you to identify fraudulent cardholders in a similar manner.

Use Internal Edits! Quite often, customers using fictitious account numbers will input one number after another until they receive an authorization. Have internal edits check for multiple transaction attempts in which the last 3 or 4 digits are different for each transmission. Such a system may also be programmed to flag card numbers for which a chargeback has been previously associated.

Get Signed Proof-of-Delivery! Ship your orders in such a manner that you receive a signed proof-of-Delivery. This, combined with a positive AVS response, will help you to defend some types of disputes.

Flag Recurring Transactions! If you charge your customers on a recurring basis, make sure that you identify each transaction as a recurring transaction. (Check with your vendor to find out if the software/system you use will allow for this.) By flagging transactions as recurring, you will help protect yourself from chargebacks for "duplicate processing" providing cardholders with a clearly marked and easy-to-use cancellation form helps them to notify you if they decide to cancel services.

If you do receive a Retrieval Request (your first notification of a transaction dispute), be sure to respond as soon as it is received. Your response time will be critical and a slow response may result in a chargeback. If a credit has already been issued for the respective transaction, please remit that documentation with your first response. If you have questions about these guidelines, please call Keith Friedman @ (818) 591-7585 or E-Mail, or see our Web Site @

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Last modified: November 08, 2002