Protection from Fraud

April 27, 2012

How to Protect Your Business from Merchant Account Fraud

In order to protect your business from high risk merchant account fraud, you will find yourself in the position of having to be as smart and as clever as the crooks themselves. In a way, this amounts to a technological dance, with fraud detection solutions evolving in response to the latest schemes fraudsters devise to acquire and to use purloined credit card account information. The same holds true when applying for usda home loans so its always in your best interest to trends with extreme caution.

There are many transaction management utilities available that will give you access to the level of extensive reporting and data comparison necessary to monitor your transactions. The system itself is configured to alert you to suspicious activity, against which you can then take action. Normally when you apply for a merchant account, fraud detection systems will be recommended to you. In order to use these systems to their best advantage, it’s important to understand three core principles that define what you are trying to accomplish in detecting and responding to suspicious activity. These principles hold true regardless of the management utility you use.

First, establish thresholds for the processing of each order. These can range in complexity and be applied in any sequence that best suits your business. A threshold may be a dollar limit on an order, or even a total for a day, week, or other appropriate period. (Similarly you can set a limit for orders or sales in a given time period.) This level of sophistication is especially important in combating high risk merchant account fraud related to online payment processing.

Thresholds can be tied to specific IP addresses so only a given dollar or order amount can originate from that computer according to the parameters you establish. This prevents criminals who have acquired multiple stolen cards to test them all from one computer to see if they can accomplish an approved purchase. This kind of threshold monitoring is then tied to more specific bans directed at particular users. You can exclude an IP address, a given credit card number, a bank bin number, or even geographic regions that seem to be the source of the potentially fraudulent activity.

It is just as important, however, for any fraud protection system to also give you the flexibility to establish exclusions or overrides. This will ensure that your legitimate and honest customers are not penalized by the bans and limits put in place to shut down the crooks. Always remember when you are evaluating a fraud detection and prevention system that you are both trying to stop the crooks and protect your legitimate customers without compromising the ease with which they can use their cards to make a purchase from you.

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