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When neither a PIN nor signature verification is an option (i.e. Card Not Present sales)

It is becoming increasingly important to consumers to be able to buy goods and services without having to physically go to the shops. Card Not Present (CNP) transactions are an important part of your retail offering. Engaging in ecommerce or accepting cards over the phone or by mail should not mean that you lose out to the criminals who seek to abuse the card payments system.

The problem in countering Card Not Present fraud lies in the fact that neither the card nor the cardholder is present for the sale. This means that:

  • Businesses that accept cards in a CNP environment are unable to check the physical security features of the card to determine if it is genuine or not
  • Without a signature or a PIN it is not easy to verify that the customer is the genuine cardholder
  • Card issuers cannot guarantee that the information provided in a card-not-present environment has been given by the genuine cardholder

(It should be noted that merchants who accept CNP credit card sales in a 3D Secure environment are much more secure in all of these instances)

Remember, you can be held financially accountable for an unsecured fraudulent transaction, even if the card issuer has provided an authorisation code during the sale. The authorisation from the card issuer confirms that funds are available to cover the sale amount and that the card was not reported lost or stolen at the time of the transaction.

To protect you against CNP fraud, there are a number of simple guidelines which, if followed, will help stop fraudulent transactions from the outset. These straightforward steps will allow you to determine whether or not a card or the cardholder is genuine. We recommend that these guidelines be incorporated into regular staff training programs.

For all Card Not Present sales, the following details must be obtained:

  • The card number
  • Cardholder’s name, as it appears on the card
  • Card expiry date
  • The cardholder’s billing address
  • Delivery address (if different to billing address)
  • Contact phone number (preferably a landline number as mobile phone numbers are not always traceable)
  • The name of the card issuing bank
  • Ask the customer for their Card Security Code (CSC), the three digits on the signature panel (The CSC will be verified online against the card, by the card issuer)
  • Be wary of orders coming from free e-mail addresses such as hotmail or yahoo as these cannot be traced back to the sender
  • Be aware when the customer has trouble remembering their address or details
  • Is the credit card in the customer's name? If the answer is no, do not proceed with the transaction

Telltale signs of fraudulent CNP transactions

  • Individuals buying in bulk where they wouldn’t normally can be a sign of a fraudulent purchase. In today’s economic environment a high value sale is very welcome but don’t be dazzled by customers looking for large amounts of stock. Make sure you check all of their details before proceeding with the sale. Unfortunately in most cases, if it sounds too good to be true, it most likely is
  • A customer buying multiple quantities of random items could be deemed unusual. They may be purchasing with the intention to resell the items
  • Delivery addresses that don’t match the billing addresses (except in the case of a florist or similar)
  • Orders shipped to a single address made on multiple credit or debit cards

Delivering orders from CNP sales

  • Use registered post or a reputable courier for delivery
  • Aim to deliver to the billing address only
  • Always deliver directly to the address and give the goods to the purchaser; not to a third party that might happen to be at the delivery site
  • Always get the customer to sign a receipt of delivery
  • Never deliver to a vacant address, a non-agreed address or a P.O. Box
  • Avoid rush or overnight orders from customers with whom you are not familiar