Anyone who accepts credit cards can be a victim of credit card fraud. That's where credit card fraud screening comes in. This article explains the various credit card fraud dangers, as well as the benefits of screening for credit card fraud.

What Is Credit Card Fraud?

Any misuse of credit cards constitutes credit card fraud. This can include a wide variety of approaches, including the following:

• Credit card application fraud, in which some or all of the information used to obtain the card in the first place is not true
• Credit card interception or non-receipt fraud, in which the card is stolen in the mail prior to reaching the intended recipient
• Credit card loss or theft fraud, in which a card is used by someone to whom it does not belong
• Credit card faking or alteration, in which a legitimate card is tampered with in order to be used fraudulently
• Credit card skimming, in which the magnetic stripe on a card is read by a pocket device and additional items or substitute items are charged on the card that has been proffered by the legitimate customer
• Credit card takeover, in which the fraudster takes over the credit card of an unsuspecting victim by, for example, impersonating the victim and providing sufficient information for the credit card company to change the address to one that the fraudster uses
• Site spoofing, in which a website closely resembling that of a legitimate merchant or financial institution is created to dupe visitors into providing their credit card information
• Phishing, in which a variety of methods are used to induce unwary victims to divulge credit card information

Credit Card Fraud Screening Basics

Credit card fraud screening is a response to the various types of credit card fraud listed above. Credit card fraud screening is a service offered by a variety of organizations to assist merchants in preventing credit card fraud. The overarching aim is to make sure each credit card transaction is legitimate.

Payment gateway providers may have screening features. If they do, you may need to make sure they are on, because they are reportedly sometimes turned off by default. If the payment gateway's security features do not trip the transaction and a chargeback is incurred, the merchant may be liable. So even if a payment gateway offers some screening features, it may be worth looking into additional credit card fraud screening services.

Credit card fraud screening includes checking a variety of items to make sure there are no red flags. These include:

• AVS, the Address Verification System, through which the billing details for an online order are compared to those on file at the cardholder's bank
• CVV2, CVC2, and CID verification, in which the additional 3- or 4-digit number on the front or back of a credit card is requested from the customer
• IP address, to verify that an order comes from the country indicated by the billing address
• Numerous declines before a transaction is accepted, which may indicate that someone is working from a list of information, rather than from cards themselves
• Shipping address different from billing address, although there are legitimate reasons for this, such as a student away at school or a cardholder sending a gift
• Unusual orders, including odd order frequency (multiple orders in a short period, for example)
• Unexpected spelling errors

Some of these are more easily available than others for humans to check.

Credit Card Fraud Screening Services

There are a variety of organizations offering credit card fraud screening. These include:

• CyberSource®, offering CyberSource Decision Manager
• MaxMind®, offering minFraud Service (standard and premium)
• Verified by VISA®
• MasterCard® SecureCode®
• Experian® Payments
• Trustwave®

Many other services are available, as well. Services are likely to be scaled to the size of the business, and may be measured in transaction queries per month and charges may be on a per query basis. So either through your payment gateway's services configured to best advantage, or your payment gateway and additional credit card fraud screening, you should be able to reduce the number of fraudulent charges that are allowed.

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