How can an online merchant protect itself from unscrupulous chargebacks?

Here are some ways to reduce the risk of chargebacks for online fraudulent or unauthorized transactions. Always perform AVS and CVV checks on every transaction (more detail below).

> Negative Database – By maintaining a database of problem customers, you can identify high-risk transactions, block specific credit card numbers and disallow future purchases.

> Multiple Orders – By limiting the number of transactions per hour, day or week from a specific customer, you may reduce potential fraud.

> Address Verification Service (AVS) – AVS is a fraud reduction service that allows you to verify a cardholder’s address prior to completing the sale. The AVS system indicates if there is a full, partial or no match response on the address by comparing an address in the card issuer’s database.

> Know Your Customers – You may avoid chargebacks simply by getting to know your customers. For example, you can capture the customer’s telephone number, then call back to verify the order.

> Customer Service Phone Number – Make sure your customer service phone number is printed on the receipt. This makes it easier for customers to resolve disputes by phone rather than through the chargeback process.

> CVV2/CVC2 – Both Visa and MasterCard have this security feature printed on the back of their cards, which you can verify as an additional security check.