Released on = July 27, 2006, 11:56 pm

Press Release Author = FraudLabs.com

Industry = Retail

Press Release Summary = FLORIDA, July 27, 2006 -FraudLabs prepare 10 tips to reduce
credit card fraud for Internet Merchants.

Press Release Body = 1. Geolocation by IP address

In the world of e-commerce, knowing the online buyers geographic information can
help to prevent fraud. Geolocation technology provides the absolute geographic
location by IP address of the computer from which the order is made in real-time
e-commerce transactions, which can identify locations where the probability of fraud
is the highest.
Geolocation by IP address can identify the user\'s exact location or calculate the
distance between billing address of online buyers and actual location of persons
entering the orders. As a result, it allows the merchants to apply additional
authentication measures or identification for those transactions which show a great
difference of distance. As a result, Geolocation technology delivers data that helps
merchants determine which transactions to review and which to allow. This creates a
beneficial balance between the risk of fraud losses and that of blocking legitimate
customers. Legitimate customers will actually welcome legitimate authentication
measures, which will protect them from credit card fraud also and keep the costs of
doing business on the Internet down, especially if the customer is properly informed
and advised by the merchant of these protection measures. Using a service such as
that provided by FraudLabsT can keep the cost of authentication down as you can
target the authentication toward the most probably geographic locations for fraud.


2. Comparison of the IP address country with the billing address country

An IP address is a unique network identifier issued by an Internet Service Provider
to a user's computer every time they are logged on to the Internet. Make sure the IP
address country and the billing address country are the same. By using fraud
detection web services like FraudLabsT, you can detect the IP address country for
the customers that are placing the orders. If the customers billing and shipping
addresses are in the US, but the person placing the order is logged in from an IP in
Russia, this will require closer scrutiny, and will often trigger anti-fraud
precautions. Although this situation could be legitimate, but it\'s probably worth a
phone call to the customer\'s US phone number or other measures to confirm the order
and the identity of the credit card user.

3. Check whether the country is a "high risk" country

Always require closer inspection for orders that being shipped to an international
address. Pay more attention if the card or the shipping address is in an area prone
to credit card fraud. According to a ClearCommerce® survey, the top 12 international
sources for online fraud are Ukraine, Indonesia, Yugoslavia, Lithuania, Egypt,
Romania, Bulgaria, Turkey, Russia, Pakistan, Malaysia, and Israel. The same survey
also showed that the 12 countries with the lowest fraud rates are Austria, New
Zealand, Taiwan, Norway, Spain, Japan, Switzerland, South Africa, Hong Kong, the UK,
France, and Australia. FraudLabsT IP Geolocation service can identify the country of
origin for businesses who need this information. While the fact that an order
originates or is being delivered to one of the high risk countries is not, in
itself, an indication of fraud, nor is the indication that the order originates in a
low risk country any guarantee of its legitimacy, the trends and statistics are
there, and merchants must use information about the origin and delivery addresses as
a guide to how much authentication they should require from customers.

4. Check whether a free or anonymous e-mail address was used

Be aware that online buyers using free anonymous e-mail providers such as
hotmail.com or yahoo.com are virtually untraceable. There is a much higher incidence
of fraud coming from free email services than from paid service providers. Virtually
everyone who has a free, web-based email address or forwarding address also has a
traceable ISP address. While many legitimate customers use free email addresses,
because they are convenient and economical. It is also true that most fraudsters use
free email addresses in order to remain anonymous. However, most businesses
purchasing a business product have their own domain names and even if they do not,
they would not use a free email address. For these reasons, you need to have some
way to get additional information when a free email address is used, such as the
ability to locate the customer geographically when they place their order, so you
will know which orders need further checking for authenticity. Keep an eye out for
newly registered domain names. This is because fraudsters can register a new domain
easily using the stolen credit card to pose as a new business entity. FraudLabsT can
provide the free email detection to help you make these decisions.


5. Check whether an anonymous proxy server was used to place the order

Anonymous proxy servers allow Internet users to hide their actual IP address. The
main purpose using a proxy server is to remain anonymous or to avoid being detected.
While well known businesses use this to protect internal networks, fraudsters hide
themselves behind anonymous proxy servers. It is not easy to detect anonymous proxy
servers because they appear and disappear from time to time. FraudLabsT provides a
hassle free method to keep the always up-to-date anonymous proxy server list as web
service.
6. Check whether the mailing address is a mailbox or ship-forward service

Fraudsters prefer to stay untraceable but still need to collect physical
merchandise. One way is to use a public P.O.Box, a private mailbox, or a drop
shipment forwarding address as a temporary point of receiving. Never send
merchandise to a public rented mailbox, a P.O. Box (except for those you identify as
legitimate major companies by phoning their listed number), or shipping forwarder,
because the actual location and identity of the receiver is undetectable.

7. Check whether the phone number is valid and located within the correct ZIP code

Often, merchant will discover orders with invalid zip codes or a mismatch between
the zip code and area code will produce fraud rates that are significantly higher
than usual. They may wish to apply more rigorous fraud prevention standards by
verifying the validity of zip code and the area code. In addition, if the phone is
identified as a V.O.I.P phone, offered by many services these days, a delay in
shipment until the payment clears may be in order, especially for non-times
sensitive items.

8. Compare the credit card issuing bank's country with the billing address country

Another key point to bear in mind is to check the issuing country and the billing
address. Make sure the issuing country and billing address country are the same.
This is especially important, because minor banks may not have rigorous
identification procedures.

9. Call the credit card issuing bank to verify the validity of credit card

If online merchants have any suspicions about an order and need to confirm the
details of the order, they can call the issuing bank and ask to confirm the general
account details. This is to make sure that the card is not stolen. The issuing bank
phone number is based on the first 6 digits of credit card number known as the Bank
Identification Number (BIN).

10. Request more identification if in doubt

While consumers value their privacy and require quick web site ordering facilities,
it is important to gather sufficient customer identity details during the ordering
process. The customers' name, credit card number and expiry date is not enough.
Merchants should call them for verification through phone or request a photo ID to
be faxed if they have any doubts.

In Summary

Every merchant should aware of online credit card fraud, although it is something
that can never be completely eliminated, but rather something that must be managed.
One of the most important factors in controlling fraud is understanding the customer
and implementing security measures that can adapt to the level of risk in each
transaction. Applying fraud detection web services such as FraudLabsT supplies in
the order management can greatly reduce credit card fraud. This white paper focuses
on preventative methods and procedures that merchants can perform in order to limit
credit card fraud.


For more information about the FraudLabsT Credit Card Fraud Detection Web Service,
please visit http://www.fraudlabs.com or email sales@fraudlabs.com.

Web Site = http://www.fraudlabs.com

Contact Details = FraudLabs.com
1901 60th Place,
Suite L1020, Bradenton,
FL 34203, United States.

Phone : +1 (866) 614-6288
Fax : +1 (941) 240-2105