Address verification is a crucial step in the sale of any e-commerce merchant’s product. Without address checks, there is likely a whole lot of fraud happening.
We know an online merchant whose red flag goes up whenever he receives an order in which the credit card billing address and shipping address are different. His reaction is understandable given the age we live in.
So what does he do?
- Decline the transaction: This is playing it safe, but could result in a false positive decline, when the order is legitimate, but the merchant thinks otherwise (False declines are at an all-time high).
- Proceed with the transaction: This is less safe. Although the order may signal a gift from one person to another, it also signals a fraudster stole/purchased the credit card details of an unassuming consumer and is trying to score fast.
- Look for other red flag signs? There are several address verification criteria merchants can use.
- Sketchy shipping address, locale: An order, for example, facilitated in New Hampshire shipped to the far east strongly signifies a fraudulent purchase. Checking IP addresses and the use of Google Maps can be effective also.
- Large/bulk order: Large and bulk orders signal a fraudster is looking to score big and fast. Credit card issuers have become astute at spotting inconsistencies with consumer spending habits, in which they will telephone the cardholder to verify the purchase.
- Requested no signature upon receipt: This could signify the recipient is not the real credit card holder.
- Telephone the cardholder: Telephoning the cardholder and verifying specific details about the order is often the answer to the problem. In fact, we know a merchant who will ask questions specific to the mailing address, such as what the weather is like (while on the weather.gov website).
- Telephone your bank: Your acquiring bank and/or payment processor can be assets in an address verification situation, each taking steps to verify the legitimacy of the sale.
- Who’s your shipper? UPS offers online merchants a nice feature: It doesn’t ship to P.O. boxes.
The beauty of address verification: When mismatches are legitimate
We recently tweeted a statistic by cybercrime fighter and thinktank ThreatMetrix, which said there were 88 million e-commerce attacks in quarter one of 2016. More than ever, online merchants must be on guard.
Regarding our bit about false positive declines. Here are several scenarios when legitimate orders are denied:
Gift order: When someone purchases and ships a gift to someone at another address, it’s important to take into consideration the time of year, particularly November and December.
College student: A student may order a product or service online, use his permanent home as his billing address, yet ship to a dormitory or apartment near campus. Geolocation is a useful tool here.
Seasonal homes: Many Americans are snowbirds – they flock south for the winter months yet their credit card billing address is their permanent residence up north. A call soliciting help from your payment processor or acquiring bank would be worthwhile.
We’re curious to what our merchants and partners address verification check policies are. Please leave a comment below.