What It Means for Your Business
Whenever you accept an online credit card purchase, there is a risk of fraud. Scammers use stolen cards or card information to make fraudulent transactions until the legitimate cardholder notices the unusual activity and contacts their bank to dispute the charges. Unfortunately, as a seller, you are held liable for any fraudulent transactions.
While the rise of e-commerce comes with an increased risk of identify theft and chargebacks, there are steps you can take to protect your business. We recommend always confirming your customer's information for any online payment to prevent an unfortunate fraudulent event.
Steps to Limit Payment Fraud
If you have received an indicator that a particular transaction has a high-fraud risk or see suspicious activity, here are the steps to take.
1. What type of transaction is it?
The fraudster's goal is to take something from you and disappear. If you have serviced their car multiple times, chances are, even if you have a high-fraud risk transaction, you will be ok. With the VIN in hand, you could report the customer to the police right away and the fraudsters know that. But if your customer has no prior history at your business and wants to buy $2,000 worth of high resalable goods, continue your investigation.
2. Call your customer
If you wanted to disappear, what would you do? I would use a fake email address and a fake phone number. To verify them, call them first. Is the number in service? Is the voicemail message the same as the name of the customer on file? If they pick up, ask them simple questions, such as what's the phone number they are calling from and what's their postal code (check if it matches the one in the transaction detail).
3. Verify their location
As a scammer, there are a lot of location indicators that can compromise their story. Normally, your customers are in the physical vicinity of your business. Therefore, check the postal code in the transaction's details in Kimoby. Is it close to you? Does it match the area code of their cellphone? If not, those can be signs that the customer is using somebody else's information to contact you.
4. ID check
If you are still unsure about your customer's identity, ask for a government-issued ID. If you are doing an online transaction, they can send you a picture of the card. Is the name on the ID the same as the credit card? Is the postal code the same or in the same area? Was the picture just taken on a table (good sign) or does it look computer generated (bad sign)?
To be even more sure, do the same exercise in person and invest in an infrared light (only $30 on Amazon) to verify if the ID is real before giving your order to your customer.
5. Cancelling the order
After all those checks, you've come to the conclusion that your customer is lying to you. If you haven't delivered the service or goods, refund the order. You won't gain or lose anything and it's your right to refuse a transaction that can be harmful to your business. If you've already delivered the service, there isn't much to do, but to document the interactions you've had with the customer so that in case of chargeback, the appeal process has a higher chance of success.
Discover Kimoby Pay's fraud-prevention feature here.