Here are few pointers to consider when processing an online order.
All internet orders should be considered fraudant unless proven
Your Online credit card payment provider will provide you with an
authorization to charge your customer account if the card is valid.
Otherwise the card will be rejected.
IT IS YOUR responsibility is to verify that the card owner was the
one who placed the order and not someone else!.
Verify the AVS (Address Verification System). Don't ship unless
both the address and the zip code submitted match the bank's records.
Use CVV1 and CVV2 verification. CVV are those 3 digits that are
not embossed on the card. (3 digits to MasterCard and visa, 4 digits
to American Express). A match will give you loose indication that the
card is at the possession of your customer.
Evaluate the order. Most internet users will NOT place an order on
their first visit to your site. The Internet standards are 4.5 visits
before actually placing an order. Have your system track this
variable and pay an extra caution for those who place an order on
first visit. I like to call it "The Shake hand factor" (SH>0 is fine)
SH factor which very high, lets say 30, might result of a bad site
Compare the order $ value against the average online sale value of
your market. FYI Gem and jewelry online sales average at $ 254.
If you have a shopping cart installed. Be extra cautious for
orders submitted by email, especially from free web based email
account (hotmail etc)
Evaluate the order composition. 2,000$ order shipped by 8$ airmail
Always have a proof of shipment, FedEx airbill for example. It
will help you resolve chargebacks.
Get the IP of your user and resolve it to its geographical
location. You may surprise how many honest looking orders resolves to
Russia, Indonesia and other online fraud centers. here is a good tool
that you can freely use
Consider blocking access to your site from countries of high risk,
or countries that you don't have an intention to serve. This can be
done based on the user IP. A great service is GeoIP Free Country, by
MaxMind - http://www.maxmind.com/app/geoip_country
Determine your risk factor. Online credit card payment ARE RISKY,
you can limit the $ value orders you are willing to accept online.
For greater amounts ask for a wire transfer....
Most important - Be calm. Don't rush to ship until you are
positive that all signs indicate an honest transaction. If you have
just a tiny suspicion, ask your customer to FAX you an authorization
Hope it helps