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Avoiding credit card fraud
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June 30, 1998: 7:26 p.m. ET
Small firms are especially vulnerable, but a few precautions can protect you
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NEW YORK (CNNfn) - As more companies get online, small businesses are becoming increasingly vulnerable to credit card fraud.
Unlike consumers -- who get a maximum liability of $50 as long as they follow the simple procedures outlined in the Fair Credit Billing Act -- businesses bear 100 percent of the loss when stolen or bogus credit card information is used by their customers.
"Small business owners are getting stuck holding the bag for this growing -- but largely unpublicized -- problem of credit card fraud for merchants," said Dr. Audri Lanford, an authority on Internet scams and co-editor of Internet ScamBusters.
You can minimize your company's risk of online credit card fraud by taking a few simple precautions, according to Internet ScamBusters.
First of all, validate each order carefully. Don't accept orders unless complete information is provided (including full address and phone number).
Be wary of orders with different "bill to" and "ship to" addresses. Make customers who use a different "ship to" address send a fax with their signature and credit card number authorizing the transaction.
Be especially careful with orders that come from free email services. There is a much higher incidence of fraud from these services. Anyone can open a free, anonymous email account in another person's name and then send the merchant an order using the fake email account and a fraudulent credit card number.
Additonally, ScamBusters recommends taking these precautions:
- Be wary of orders that are larger than your typical order amount and orders with next day delivery. Crooks don't care what it costs, since they aren't planning on paying for it anyway.
- Pay extra attention to international orders. Do everything you can to validate the order before you ship your product to a different country.
- Consider using software or services, such as Cybersource and Clear Commerce Corp., to fight credit card fraud online.
If you are taken by a credit card thief, contact your merchant processor immediately to inform them of the situation. The merchant provider may be able to give you the name and number of the cardholder's bank enabling you to contact and inform the cardholder that his or her card number had been stolen.
You may also want to contact your bank, as well as the authorities, though the latter may not do much more than take a report. 
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ScamBusters
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