Key to successful fraud detection lies with retailer awareness

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"International credit card fraud does happen but the reality is that retailers can protect themselves very effectively by taking a few simple precautions," says development manager Brendon Williamson. "The biggest danger is being so dazzled by the promise of quick returns that they throw common sense out of the window."

Clear warning signs often precede large-scale credit card fraud. "One of our clients recently closed their business because of fraud but it should never have got that far. This retailer refused to sign up for our fraud protection service, and then did not do basic due diligence on its customers. When you are importing luxury leather goods to sell in South Africa and then most of your sales go overseas, alarm bells should ring. Why would anybody wait three weeks and pay extra shipping costs for something they could easily find in their local market? You should know that pot of gold is going to evaporate."

Another online retailer shipped an order worth R25,000 - much more than the average transaction - to an unverified address in Pretoria, even though it was bought with a Russian credit card. "How much more obvious can a fraud get?

"These are exactly the kinds of fraud that the company's system is designed to prevent. Basic checks such as matching the delivery address to the origin of the credit card make a lot of difference.

Retailers who are new to the online environment should limit their sales to South Africa initially. "It takes time to learn who your typical customer is, and what a typical transaction is. Once you have that experience, you are in a better position to make the judgement calls about which transactions are legitimate.

"It is also wise not to get too paranoid. Keep your focus on serving your legitimate customers well and do not make them jump through too many security hoops, as 80% of your fraud is going to come from 20% of your customers and those are often easy to identify. Apply common sense and ask for help when you are unsure. Every business has risks; success just depends on how well you manage them," he concludes.

For more information, go to www.paygate.co.za.