6 Ways to Prevent Online Credit Card Fraud from Ruining Your Business

Credit card fraud is damaging not only to the consumer but also to the business scammed. What’s worse is that the number of incidents only gets higher. In fact, credit-card losses worldwide amounted to $27.85 billion in 2018.

While some fraudulent transactions took place at brick-and-mortar businesses, but according to a Press Release by Javelin Strategy, 81 percent of the fraudulent transactions were done online. As a small business owner, this is a major concern you should immediately address. Otherwise, it’s only a matter of time until a cybercriminal targets you next.

Here’s how you can protect your business from credit card fraud in 6 solid ways so that your business doesn’t get ruined. 

1. Take Note of the Billing and Shipping Addresses

One way to spot a credit card fraud is when the customer’s billing and shipping addresses don’t match. Plus, if the customer asks for expedited shipping, the seller might want to double-check the transaction. That’s another red flag.

While this isn’t always a surefire sign of fraud, there’s no harm in trying—especially when it involves large orders. To avoid huge losses on the business end, it’s best for them to confirm by calling the phone numbers as well.


2. Make Sure the IP and Credit Card Addresses Match

If an IP address doesn’t match the address reflected on the credit card used, a fraudulent transaction may be underway. The credit card may have a local address while the IP of the supposed buyer came from overseas.

For the business’s safety, it’s best to look up the IP address first before proceeding with the order. There are websites such as IP Location that help them research an IP for free.

Another tip to help an online business filter credit card scams is by restricting all IP addresses that come from countries they don’t ship to. This can be done on the back end of their e-commerce site using a plug-in or a built-in feature. 

3. Sell Products in a Secure Online Platform to Prevent Credit Card Scam

Strategic ways to prevent credit card fraud online

Online marketplaces, especially the more established ones, like Shopify, constantly create updates to secure their platform and maintain a safe consumer-business environment. Most of them are PCI-compliant, which means they maintain a secure network, a vulnerability-management program, and stringent access-control measures. 

When looking to sell their products online, small businesses should consider listing on these online platforms first.

PCI-compliant marketplaces also implement measures to protect cardholder data, which is a win-win for both business and consumer. The consumer gains the confidence to make purchases through this platform, which, in turn, guarantees more sales for the seller.


4. Limit the Number of Declined Transactions 

When scammers attempt to make a fraudulent order, this is usually done using a malicious software script that tries many credit-card numbers in succession. Even if the transaction doesn’t go through, the seller can be slapped a fine every time it’s declined.  

To prevent these incidents, it’s best to impose a limit on the number of times buyers can incorrectly input their credit card numbers. Once they exceed that limit, they’ll be banned from making a transaction for a certain period. 

5. Require the Security Code

Here's how to prevent credit card fraud online

Credit cards come with a security code, usually, a three-digit number, printed on the back. For American Express, it’s a four-digit code placed on the front of the card. Unless the fraudster has the credit card on hand, they won’t be able to retrieve this code since it isn’t stored on the magnetic strip.

The code is called differently for every credit card. For instance, Visa refers to it as a CVV2 while MasterCard uses CVC2. Whatever credit card a business accepts, it’s best if their third-party payment platform requires this code to confirm transactions, be it a premium credit card or something else.


6. Watch Out for Subtle Warning Signs about Credit Card Fraud

For online businesses today, it’s much better to be safe than sorry. These warning signs that a credit card fraud is about to take place will help you detect a fraudulent charge and dodge it before it happens:

  • Big-ticket orders with high resale value 
  • Multiple orders of the same items, especially if it’s unusual to order them in multiples 
  • “Rush” or overnight transactions 
  • Multiple transactions within the same day
  • Multiple transactions from a single IP address

Remain Vigilant to Avoid Credit Card Fraud

It’s especially important for online businesses to always be on the lookout for credit card fraud, especially when they’re not able to see the signs in person. With the tips and tricks listed above, you will increase your chances of preventing a cyberattack and protect your business from unnecessary losses.

It’s easier today to protect your online store from cyberattacks than it used to be in the past.

Emenike Emmanuel
Emenike Emmanuel is a multiple award-winning blogger, CEO of Entrepreneur Business Blog, Chief Evangelist of Ebusinessroom Ventures, and the Lead Coach of an online community of over 12,000 business owners called, The Excellent Entrepreneurs' Network. He’s here to help you start, manage and grow a profitable and sustainable business using digital marketing strategies. Follow him on Facebook, Twitter, Instagram, LinkedIn & Pinterest with this handle, @emenikeng. Telegram group - | Email: [email protected]

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