Thieves have a variety of ways of getting credit card numbers. Sometimes they use computer software to generate numbers at random until they find one that matches. Sometimes they retrieve charge card carbons from the trash at small retail stores, or they call consumers or send them email telling them that due to a technical problem they need to "confirm" their credit card information (by telling the credit card number to the person who called, or typing the number into email or a form if it's on the web).

There are several steps you can take to help minimize the potential for fraud.

Use address verification for card-not-present sales. (If the address entered in the billing fields don't match the address the credit card company has on file for the card holder, the transaction doesn't go through.) If the credit card processing service you use has a fraud detection feature or add-on, consider using it. You might also block some or all foreign sales (however, in a global market, doing so might result in you losing a lot of sales.)

Be on guard for unusually high dollar amounts of sales, an unusual number of sales in a short period of time, and anything else that might signal a problem. Ask for a phone number as well as the shipping address. Before processing any sizeable order or any order that seems strange for any reason, call the credit card holder to verify that the purchase was made. (Consider looking up a phone number for the business or consumer on the Internet and calling that number first.)

Have a field for email address on your order forms and make it a required field. Be sure the address comes from a valid domain. Have your web developer set up your shopping cart to send a "thank you for your order" message whenever an order is placed, and have it set up so that if the email to the customer bounces, you get notified. Whenever an email bounces, first look at why it bounced. (For example, was it a simple typo such as mysite.cmo instead of mysite.com?) If there's anything that arouses even a little suspicion try contacting the cardholder before shipping the order to verify they made the purchase.

More:
Get a Merchant Account
How to Protect Your Business against Credit Card Fraud

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