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Feb 14, 2009 
Merchants operating on the Internet are responsible for verifying the validity of their customers’ personal information prior to processing their payments. Although the online payment acceptance environment does not offer the advantage that physical merchants have of interacting directly with consumers and requesting identification documentation when considered necessary, the ultimate financial responsibility for fraudulent transactions is born by the merchant. It is strongly recommended that web-based merchants check the validity of the customer’s telephone number, physical address, and email address prior to processing a transaction. In particular, the following simple verification steps will help detect data-entry errors made by customers and may also uncover potential fraud:
- Provide separate fields for stationary and cell phones. For landlines, check the telephone number’s area code and telephone prefix of the phone number provided by the customer to make sure that they are valid for the entered city and state. Identify mismatches and allow the customer to re-enter information if desired. For cell phones, call the number provided when it does not match the above mentioned characteristics.
- Use directory services to verify that the provided ZIP code is valid for the provided city and state. Consider allowing customers to override alerts, as information may be valid due to recent updates or wrong data.
- Check the validity of the provided email addresses by sending order confirmations. If the email comes back as “undeliverable,” that can be an indication of a fraudulent activity. At the same time, some customers do not provide valid email addresses for fear they would be used for telemarketing purposes or sold to third-party entities.
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accept credit cards, merchant account, merchant services, online payment
