Fraud Prevention 101

Preventing unwanted transactions is a key component to any business that accepts payments and should be top of mind for merchants. But where to start and how do you know which transactions should be accepted and which transactions should be denied? There is no black and white answer to these questions as each business is different from another. There is however best practices that should be followed at all times and by doing this you’ll build a solid security foundation to ensure business safety.


Fraud prevention 101 is all about asking questions to make sure your business is not being taken advantage of. From point of sale to e-Commerce transactions, if you ask the right questions and understand the expected response you’ll be able to prevent unwanted transactions and increase the number of accepted payments. Questions are asked in the form of data requests, such as;


For e-Commerce:

  • Asking for the first and last name on the card being used for the transaction
  • Asking for the billing and shipping address associated with the card
  • Asking for the email address and phone number
  • Asking for the Card Verification Value (CVV)


Two critical foundation blocks of all fraud prevention are the Address Verification System and the Card Verification Value. These are important for high risk vendors that sell online to prevent fraudulent transactions. These systems provided by all reputable processors do the following:


  • Address Verification System (AVS)
    • AVS works for transaction types of all kind, from e-Commerce, Swipe, and keyed AVS checks to make sure that the address on file with the card company matches the information being provided at the time the transaction takes place. There are different levels of AVS, from just verifying the zip code matches to verifying that the entire addresses is accurate. Depending on your business you may decide to check one level over another.
  • Card Verification Value (CVV, CVV2, CID)
    • The acronyms listed above are all terms for the same feature. A code, listed only on the card which is tied directly to the card to help ensure that in transactions that are non face to face that person making the purchase has the card in hand.


For Point of Sale & Retail:

  • Ask to check ID
  • Ask for a signature


Preventing fraud in point of sale transactions is straight forward to start off with. Due to the increased risk of getting caught in a face to face transaction and the ease at which online fraud can take place taking the above mentioned steps will help reduce the likeness of fraud taking place at your shop. Some online vendors like online e-cig vendors or ecommerce furniture stores may be more susceptible to fraud and shuld take extra precautions.


Much of fraud prevention is minimizing the opportunity for people to take advantage of you. By asking enough questions and gathering the right kind of information you’ll take the first steps in securing your business.


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