Moto fraud red flags

Card-not-present fraud is the most prevalent type of fraud on Australian cards, approximately 85% of fraudulent transactions are card-not-present.

If you are receiving payment for goods or services sold online or over the phone it pays to be cautious. ‘Card-not-present‘ transactions are defined as a payment “where the cardholder does not or cannot physically present the card for a merchant’s visual examination at the time that an order is given and payment effected”.

MOTO (Mail Order / Telephone Order) transactions – in which the cardholder provides card details over the phone to the merchant – are processed as card-not-present transactions. This channel is susceptible to fraud because it is difficult for the merchant to verify the card holder.

It is essential that you are aware of the potential dangers and are able to spot any potential “red flags”.

An approved transaction does not mean the card is genuine

Just because a transaction is approved, it does not mean the card is genuine. It is important to consider this when processing MOTO (Mail Order / Telephone Order) as the card is not presented to you for visual examination. Chargebacks may still occur even after a transaction is approved.

Understanding Chargebacks

A chargeback is a term used for when a customer disputes a transaction and the merchant may be required to refund the value of the goods or services. It is usually initiated by a cardholder calling their bank to enquire about the transaction.

For more information, check out our blog post about being ‘Chargeback’ aware.

The below list can help you minimise your risk.

  1. Unusually large orders or orders for multiple quantities of the same item
  2. Several orders received within a short space of time, often in increasing value
  3. Orders using multiple credit cards, especially where the first 12 digits of the card are the same and only the last four are different
  4. Orders where the card declines and a second card is immediately offered. Or orders where the cardholder asks for reduced values to be processed after an initial decline
  5. Orders requesting payment be made to a third party for “freight” or other services
  6. Orders requiring ‘urgent’ shipping or delivery to a Post Office box or third party
  7. Overseas orders especially those from countries that are uncommon or where goods could easily be purchased locally. Orders from Nigeria, Ghana, Indonesia and Singapore usually pose the highest risk
  8. Orders from Internet addresses using free e-mail addresses, (e.g. Yahoo, Hotmail) or where the only contact number provided is a mobile phone
  9. Any requests for funds to be charged to the card then monies to be sent to them through Western Union or another money transfer service
  10. Orders from someone who is not the owner of the card
  11. Orders from people claiming that they can’t be contacted “directly” because they are in a hospital, deaf, in a high-security sector of the armed services etc.
  12. The cardholder claiming they cannot provide the CCV

Tips to minimise the risk of fraudulent transactions and chargebacks

  1. Request a photocopy of both the back and front of the credit card and cardholder ID to ensure that the details match – this is an important step to validate your card holder
  2. Ensure the billing address and delivery address are consistent
  3. Above all, determine whether any of the above indicators are present and exercise caution

Live eftpos does not in any way indemnify a merchant’s transactions. The responsibility for all transactions processed rests entirely with the merchant who has chosen to transact with their card holder.

If you need support with MOTO transactions you can email or call us on 1300 780 788.

Article first posted on 16 June 2017

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Gavriel Barukh

Gav is the Client Satisfaction Manager for Live eftpos