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27 Dec 05 How To Reduce Fraud And Not Aleniate Customers Using Telephone Verification

Using telephone verification, online merchants can help prevent fraud and the associated reversal of charges from a customer’s credit card issuer. Any online company that sells large ticket items has to wonder if a new customer who wants his or her order expedited to another address is a criminal or just a generous person who forgot a birthday.

Merchants have to balance the need to avoid expensive chargebacks, where a person claims that his or her credit card was used to make a purchase without their permission, with the need to process orders quickly. Automatic phone verification allows merchants to see, in real-time, key information about customer’s phone numbers that can help detect fraudulent orders quickly.

Merchants can avoid alienating legitimate new customers by letting the customer know that by placing an order, they may receive a phone call or SMS before the order ships. If this is worded so the customer gets the impression the company cares about preventing fraud, it will not alienate a legitimate customer. Criminals will use their own phone number, which will not match the address on the credit card, thinking they can pass the fraud check. A phone verification service that identifies the location associated with the phone number, even if it is a pre-paid phone or a pager number, is needed to catch these crafty criminals.

Merchants are not the only companies that can benefit from phone verification services. Financial institutions, social networks, auction services and other businesses can request customers enter a phone number and then receive an automated call giving the customer a pin number. The customer must enter the pin in order to make any changes to his or her online account.

Any company that does business online has a duty to protect their customers from fraud. A failure to do so is not only expensive and time-consuming; customers whose accounts were accessed by another person without permission are unlikely to continue to do business with the company that let it happen. A company that gains a reputation for lax fraud controls becomes a target for criminals. If this happens, the negative publicity that ensues can greatly affect the company’s bottom line.

Phone verification services are a cost-effective, non-intrusive way for companies with an online presence to reduce fraud without alienating legitimate customers.

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