Protect your business from credit card and check fraud: there are measures you can take to prevent yourself from being victim of fraud.

• Author: Cloud, James L.

Fraud and theft are age-old problems, and fraudsters still pounce whenever they sense an opening. The good news is that financial services providers know how to combat these issues, and we are doing everything possible to educate and protect businesses.

Illegal use of credit cards is by far the most common type of fraud threatening companies doing business online. One survey showed that the top "point of pain" among Internet merchants is fraudulent purchases whereby the valid cardholder did not make the purchase charged to his or her card and the merchant had to absorb the expense.

So how do you ensure that the on line credit card payments you receive for your goods are valid? Fraud among purchases made in stores currently averages seven cents for every $100 in card transactions, according to VISA USA. Online fraud is estimated to be four to 10 times higher, based on data from a variety of sources.

When accepting payments online, these practices should be part of your standard procedures to verify and authenticate the identity of the purchaser:

* Use real-time card authorization for all purchases.

* Develop and maintain a file of fraudulent names, addresses, card numbers and company names that you come across in your transactions.

* Compile a zip code listing that spotlights geographic areas where you've experienced high fraud.

* Make sure the purchaser's card type matches his or her account number. For instance, all MasterCard account numbers begin with a "5" and all VISA account numbers begin with a "4."

* Request the name of the financial services provider that issued the card. If the customer does not know the name, the card number might have been stolen.

* Review orders that are unusually large, orders that include several of the same item, orders by first-time shoppers, orders from customers using a free e-mail service, and rush orders.

* Orders shipped to a single address yet paid for with multiple cards could be a red flag.

* Review multiple transactions paid using one card with a single billing address yet multiple shipping addresses.

* Send a confirmation e-mail to the customer so he or she can verify the transaction. Follow up with a second e-mail once the goods have been shipped. Include the amount of the purchase and the name of the purchaser.

* Review orders of high-priced items that are easy to resell, such as consumer electronics.

* Review orders for inconsistencies and obvious mistakes. Make sure the information from one...