The Grinch: Now Stealing Credit Cards

With the holiday season here and fraud levels at their annual peak, it's important to remember your business bears the primary responsibility for ensuring credit card transactions are legitimate before filling orders. If a credit card is stolen, and you fail to take the important steps required to verify the legitimacy of the order, you are left holding the bill when the rightful card holder challenges the purchase. Don't make the mistake of thinking an approval code ensures a transaction's legitimacy. It doesn't! It simply indicates the card is active and the funds are available.

If you operate a brick and mortar store, it is crucial to carefully check a photo ID, examine the credit card, and note the CVV2 code on the back of the card. Compare the signature on the receipt with the signature on the card. While the real world practicality of such measures may seem cumbersome, you may also take the added precaution of recording the customer's billing address as well as the billing phone number. If you are suspicious of a particular person, call the card holder's bank directly to verify the information further. Follow your instincts, they're usually right!

If you have an e-commerce presence, of far more importance than whether a transaction is approved or declined is the Address Verification Service (AVS) response code given for that transaction. This code indicates whether the provided address matches that of the card holder. The AVS code is comprised of three letters. The first corresponds to the street address, the second to the zip code, and the third is an overall verification of both. For example, an AVS code of YYY means: "yes" the address matches, "yes" the zip code matches and "yes," both the address and zip code match the card holder's. An AVS response code of NYZ means "no" the address does not match, "yes" the zip code matches and only the "zip" code matches. If a transaction is approved with a "YYY" AVS response code AND you're shipping to the same address in the card holder's name, you likely have a legitimate order. For larger orders, you may still want to verify the telephone number and call the card holder directly to verify the purchase. Also send the package signature required.

Don't be fooled by YYY response codes. Some crooks have access to the cardholders address information. Be observant and recognize red flags. Be suspicious of sizable purchases being shipped to alternate addresses, especially if express shipping is requested. Pay attention to whether or not the e-mail address given is valid. If the e-mail address is a person's name, check to see if it matches the card holder's name. If an order is to be shipped to a different address, then the card holder's phone is the most crucial piece of information you can get. Follow the verification steps above by calling the issuing bank. If the phone number on the order matches, simply place a courtesy call to the customer to make absolutely certain it is the card holder making the purchase. Card holders welcome the added precaution.