What are the BIN numbers used for ? If you Accept Credit Card Payments on your website or even Offline through a Virtual Terminal, then you can quickly compare live transactions against the BIN’s to validate the credit card number, also if a card is stolen, it will be listed as Stolen Card in the BIN database. So you will like to have an up to date BIN database to be effective.

So it is a question of where those numbers are released. If you Accept Credit Card Payments you will properly have faced fraud, fraud like someone that have bought a product or service from you and then made a chargeback or fraud where your credit card processor notified you that the transaction for a certain transaction was fraud due to wrong or non existing address or the card number is from a stole card.

What can you do about it? You will need to find a solution provider which is specialized in Credit Card Fraud on the Internet; you will be interested in looking at services like MaxMind or similar. The only problem is that most services only offer you a limited range of options to prevent fraud. They do offer you key data and some offer you a Management Interface where you can set up a few rules but so far no one offers a complete solution which protects you against fraud and where you can customize the system to meet your business requirements, sorry, there are a few companies but most small and medium sized companies cant effort the costs for it.
A good alternative would be to get those BIN numbers which I explained at the beginning of this post; however you will need to build your own script or software to use the BIN’s effectively. It makes no sense to buy them and just compare your Internet credit card transactions against the database, it needs more.

The question is; why does the card association not release this information the authorized payment service providers or at least let those companies compare their data against the BIN’s it would increase fraud dramatically. It is a question which will be left unanswered, sorry.

A theory could be that it is for security reasons and because the card association and its members not have full control of each and every payment gateway provider to make sure that they don’t release it to unauthorized people. This obviously is true, since if they had, there would not be that many companies offering the BIN’s for sales.

A good advice, if you offer your customers to pay online at your website and you also want to Accept Credit Card Payments, than use the tools available, even if they are not sufficient it is better than not have anything and just see the charge backs coming.

This posts contains the opinions of CCLOGIC LLC and its authors and don’t the opinions of neither the Card Association nor other Payment Service Providers.

Normally a chargeback will start with the credit card holder noticing a discrepancy on their statement whereby they will have been charged for a purchase that wasn’t authorized by them, they will make a complaint to the credit card provider. Mostly, the merchant is responsible for the fraudulent transaction, unless they can show that the transaction was valid. The provider will take the original amount from the merchant plus an administration fee levied by them, so the merchant loses the goods or services provided, plus the amount paid for them and the fee levied. This is known as the chargeback penalty. There could also be currency conversion commissions to be paid. The bank collects the chargeback fees as they arise so the merchants’ bank account could become overdrawn and bank charges incurred.  The merchant can appeal if they disagree with the charge and if the appeal succeeds then the merchant will be refunded the charges. 

Sometimes, a dishonest customer will purchase an item using their credit card online and then make a complaint to the credit card company that it is a fraudulent transaction, after they have received the goods. In these situations merchants can have trouble recuperating the payment.

If the merchant is dishonest or just doesn’t have the money to return then the credit card provider is liable for returning the funds to the customer, so to minimize this risk, the merchants chargeback risk is assessed rigorously.  Many credit card frauds can be stopped when the customer inputs their personal details; if the merchant has an efficient security check he will prevent many chargeback penalties himself as well as gaining a reputation as a trustworthy business with the credit card provider.

Credit card companies set a limit to the number of chargebacks generated by a merchant. If the number of chargebacks goes above this limit then the merchant will be fined by the company.  As well as penalties and fines imposed, chargebacks can also harm a merchants business and reputation. If, even after a fine is imposed, the number of chargebacks continues to be high, the credit card provider can decide that the costs are too high and cancel the merchants account. The merchant would be unable to accept credit cards as payment on his website and consequently lose out on sales. For some online merchants this would involve losing the majority of their sales and result in the end of their internet business.

There are many effective and valuable online credit card fraud systems on the market today that can help prevent chargeback penalties. The systems are designed to identify attempted fraud in the early ordering stages and alert the merchant so they can void the transaction. Many online merchants have no understanding of the extent of online fraud and overlook it until it is too late; awareness arrives with costs, fees and penalties. Costs of purchasing an anti-fraud system will far outweigh penalties incurred and protect your business reputation. There are a number of good websites that provide anti-fraud systems. A good system will protect you from fraudulent transactions, meaning less losses and more profit for your business and ultimately benefit your customers.

Each computer has its own unique address that identifies the location of the computer network. This is known as the IP address. You can identify where the order was placed by finding out the IP address.

Always be cautious of orders where the address for the item to be sent to is a Post office box number or a mail forwarding address. Google can check an address and identify if it is a mail forwarding company.

Unusual orders should always be carefully scrutinized. These might be requests for vast quantities of the same product or the same item ordered in multiple quantities. Also watch out for multiple orders placed from the same customer or orders placed with different names but the same credit card number or the same shipping address.

If the customer requests the order to be dispatched straight away don’t be inclined to rush through the security checks in order to not lose the sale. Many fraudsters do this deliberately, on the basis that if they give you limited time details won’t be checked thoroughly.

Some order processing software has referrer information on orders so you can look into which terms the customer used to find your site. When searching for products, people will normally search the category or the keywords products are advertised under, when fraudsters are looking they will be more likely to search under ‘overnight delivery’ or ‘international shipping’ rather than the keywords associated with the product.

Normally the billing address matches the shipping address, so if these differ take care to check through other details provided.

Contact details provided can sometimes send up discrepancies. Look out for the area/city given as the address and see if the area code is a match. If the customer uses a free email account, such as Yahoo, Hotmail or Google, be wary of email addresses that don’t match the customer’s name.

Many fraudulent transactions can be prevented straight away with vigilance and an awareness of what to look out for. If you are really unsure of an order never complete the transaction unless you have done everything you can to confirm the details. As the merchant, if a credit card is a fraud then the goods or services are lost along with the payment, the fees for processing the payment, any currency conversion commissions and there will be a chargeback penalty. On the other hand, if merchants refuse transactions as they are suspicious they face the chance of losing a legitimate sale.

There are a number of good websites that provide anti-fraud systems. A good system will protect you from fraudulent transactions, meaning less losses and more profit for your business and ultimately benefit your customers.