Merchant Guide for fraud protection

Here is a guide we have prepared to guide you through fraud protection best practices

What you and your business need to know about
e-commerce fraud protection


Unlike purchases where the customer walks into the store and the clerk can ask for signatures, PIN numbers, and I.D., in purchases made online or by phone (card-not-present) there is no physical or visual contact between merchant and customer, facilitating fraud.

Here is how the process works:

A fraudster makes a purchase at an online store using someone else's credit card.

A fraudster makes a purchase at an online store using someone else's credit card.

The acquirer (or issuing bank) checks if the card has enough balance and approves the purchase.

The acquirer (or issuing bank) checks if the card has enough balance and approves the purchase.

The transaction is completed and the goods delivered to the fraudster.

The transaction is completed and the goods delivered to the fraudster.

The actual cardholder does not recognize the purchase and asks for a chargeback.

The actual cardholder does not recognize the purchase and asks for a chargeback.

The online store reimburses the cardholder and is left with a loss.

The online store reimburses the cardholder and is left with a loss.

In some cases, the store is listed on credit card blacklist and may be penalized as well.

In some cases, the store is listed on credit card blacklist and may be penalized as well.

Fraudster activities range from using stolen, adulterated or cloned cards - in general using the data of upstanding citizens who are completely unaware that their credit card is being used inappropriately. Unauthorized purchases may also be considered fraud, such as when a child uses a parent's card, for example.

Fraudster activities range from using stolen, adulterated or cloned cards - in general using the data of upstanding citizens who are completely unaware that their credit card is being used inappropriately.

Unauthorized purchases may also be considered fraud, such as when a child uses a parent's card, for example.

My online store is “low-risk.” Even so, should I add a risk management tool?

There are two possibilities here:

1. Your company cancels any order it finds suspicious. This solves the fraud problem, but you are losing numerous safe purchases made by good customers who, for some reason, fit the risk profile or have made a small error during the transaction process. This can lead to the loss of a loyal future customer.

2. Your company has yet to be discovered by fraudsters. This is just a question of time and market exposure. Once a merchant is protected from fraud, fraudsters migrate to other stores that offer an easier target.

What are the losses resulting from fraud?

Losses can extend far beyond the value of the goods lost due to fraudulent purchases. If fraud management is not properly handled, high levels of unauthorized purchases due to suspected fraud or lengthy analyses can lead to lost sales, loss of any marketing investment, an adverse effect on the merchant's image and, most importantly, lost customers.

Merchants may not realize that transactions can be declined for the smallest errors. This may lead to loss of immediate revenue from the purchase, or more importantly, loss of a future loyal customer. As data breaches and fraud rises, security restrictions are becoming tighter. The need for hands-on fraud management for every merchant is now vital.

What should merchants know about preventing fraud for online sales?

The survival of a company that operates in the virtual world depends in part on minimizing its financial losses due to fraud, and on its ability to approve the largest number of orders in as short a time as possible.

Therefore, a good anti-fraud service will include a thorough risk management system that ensures high rates of approved sales while minimizing chargebacks, all of this in as short a response time as possible. Companies that do not practice fraud risk management run the risk of turning down good orders because fraud is suspected, and delaying order approvals as they lack the analytical skills and resources required.

What is a chargeback?

A chargeback occurs when a customer disputes a charge on his/her credit card bill. If the true owner of the card does not recognize the purchase, he or she will ask for their money back, by filing a complaint regarding a non-authorized transaction with the issuing bank. This is known as a chargeback.

In practice, the card administrator in the process of financial settlement between the parties debits the amount that would be transferred to the merchant.

By not declining orders automatically, ClearSale reduces the number of false declines that can cost sales and customer relationships.

Approve More Orders
Approve More Orders

Increase approval rates with ClearSale.

Increase revenue
Increase revenue

Reduce false positives and sell more.

100% Chargeback Guarantee
100% Chargeback Guarantee

We provide you a final decision on whether to approve, or not, each order.

Performance based pricing
Performance based pricing

Only pay for approved transactions.

The ultimate solution for
E-commerce fraud protection

Freedom to sell without worrying about chargebacks.