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FAQs on How Jewelers Can Foil Fraudulent Credit Card Purchases

Just the FAQ’s, ma’am. Michelle Rahm answers commonly-asked questions on credit-card crimes.

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CREDIT CARD FRAUD is a broad topic and one of great concern. This month, I’d like to address the questions retailers ask most frequently on the subject.

What red flags should I look for to help me identify fraudulent purchases?

Red flags to look for include: 

  • Unusually large or high dollar purchases 
  • Purchase of multiple items for styles popular among teenagers or young adults
  • Ship-to addresses or names different from the cardholder’s
  • E-mail addresses that don’t match the name of the cardholder
  • Invalid e-mail addresses
  • Requests for express shipping
  • Repeated failed attempts to enter an order, especially if a different card is used for each attempt
  • AVS response codes other than YYY
  • Questionable business names
  • Overseas transactions, especially from Indonesia, Pakistan, and Nigeria

If an order contains any of these red flags, call to verify the purchase. If it is an attempt at fraud, notify the issuing bank to put a hold on the account.  

Is there a cost associated with chargebacks?

Yes! Regardless of the reason for the chargeback, it will cost you valuable time and money.

If you’re hit by credit card fraud, you will be charged back the full dollar amount of the purchase. You will not recover the merchandise shipped and you will most likely be charged a $15 to $30 fee for the chargeback. In addition, chargebacks cost valuable time to dispute. Keep this in mind when developing your company’s policy on verifying purchases.

You should also know, you will incur costs even if a chargeback is a mistake on the part of a legitimate customer. For example, if a customer does not recognize your company name on their bill and they dispute the charge, you will likely incur a “paperwork” fee for Visa and MasterCard purchases. In addition, to dispute this type of chargeback, you will be asked to write a letter and provide copies of orders, proof of verification, shipping confirmations etc. 

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To avoid this type of chargeback, make certain your customers recognize the name of your company as it appears on billing statements. If you’re not sure how your name appears, call your merchant provider or place an order on your own website with your personal credit card. Have the information changed if you believe it could cause confusion for your customers. 

How can I verify international transactions on my site?

It is very easy to get proper address verification for U.S. purchases using the instructions I provided previously. Unfortunately, it can be a challenge to verify non-U.S. cards. While real time processors do accept payment and provide approval or declined notification, they do not currently provide accurate AVS response codes for most non-U.S. cards.

American Express is the only primary credit card provider that has an international department established for verifying overseas credit card transactions. To verify a purchase simply call American Express and ask for the international verification department.

If a purchase was made with a non-U.S. MasterCard or Visa, you can call the MasterCard/Visa call center for the issuing bank’s phone number, just as you do with U.S. card purchases. Then you can call overseas to verify. Unfortunately, many overseas banks will not cooperate with address verification. For this reason, we ask our overseas customers to provide a legible scan or fax of a photo ID and both sides of the credit card. Most of our customers appreciate the caution.

In the end, it’s your choice: if you do not feel comfortable accepting non-U.S. orders, simply make your website for U.S. orders only. 

What should I do if my card number is stolen?

If your card is stolen, immediately report it to your issuing bank. They will put a stop on the account so no further purchases can be made. Then ask for a list of the most recent purchases made with your card and attempt to contact the merchants from whom questionable purchases were made. There still may be a chance of stopping the shipment of the product. Trust me when I say the merchant is usually an innocent party to the fraud and would appreciate the opportunity to recover the merchandise or stop the shipment if at all possible.

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While there is always a risk your jewelry business will be targeted for credit card fraud, you can minimize your chance of becoming a victim by verifying each transaction carefully. By doing so, you can stop fraudulent purchases before they cost you valuable time and money.

Over the years, INSTORE has won 80 international journalism awards for its publication and website. Contact INSTORE's editors at [email protected].

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