A fraud prevention website launched on January 15, 2001, is the first initiative of the Worldwide E-Commerce Fraud Prevention Network. Located at www.merchantfraudsquad.com, the site provides expert advice about how to combat the unauthorized use of credit card numbers and other payment vehicles to purchase goods and services.

“Combating on-line fraud represents a huge challenge since merchants can be vulnerable to a wide range of criminal tactics, even if their own websites are secure,” said Jennifer Bennett, Network co-chair and vice-president for Customer Service Strategy, American Express.

The Network is a not-for-profit organization formed last fall by American Express and its coalition partners: Amazon.com, buy.com, ClearCommerce, Expedia.com, First Data Corp. and Starwood Hotels & Resorts Worldwide. More than 350 businesses and organizations have signed on as charter members, including many recognized e-commerce leaders.

The website features helpful articles including these following five tips for protecting against unauthorized use of credit cards online written by Julie Fergerson, co-founder of ClearCommerce and a founding member of the Network.



(BOLD) Obtain real time authorization from a credit card company. This ensures that the credit card has not been lost or stolen and is a valid credit card number. However, this process does not tell a merchant if the person is authorized to use the card. Therefore, other tools may be needed to help verify that the transaction is a good one.

(BOLD) Employ address verification systems, but understand the limits. Address verification systems match the billing address provided by the customer with the billing address on file with the card company. If these do not match, this may be a red flag that the person making the transaction is not authorized to use the card. However, these systems are not foolproof. A merchant may receive a large number of unmatched addresses and only a very small percent of these transactions may actually be fraudulent. And, fraud still occurs in cases where addresses are matched.

(BOLD) Use credit card verifications codes. Merchants should ask for the non-embossed code that American Express and other credit card companies put on their cards. These codes do not get printed on any receipts and are therefore harder for fraudsters to accurately reproduce.

(BOLD) Purchase rule-based detection. Using detection software, merchants can screen each transaction to see whether it meets certain pre-defined criteria. If it does, the merchant might decide to manually review the transaction or to deny it. Criteria might include billing addresses that don’t match, very high dollar transactions, an order for an unusually high number of one item or names and credit card numbers that have been linked to fraud in the past.

(BOLD) Purchase predictive statistical models. This software culls data from large, historical databases to create a profile of what typical fraudulent transactions look like. Based on this knowledge, mathematical formulas are developed that can be used to predict the likelihood that an incoming transaction is fraudulent. Again, these models concentrate on patterns such as high volume orders of certain merchandize and addresses that don’t match.

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