How to Prevent CNP Fraud

What is CNP Fraud?

In simple terms, CNP fraud is a scam where a credit card used for a purchase is not physically present for the transaction. The actual card holder then files a dispute with the credit card issuer saying:

  1. merchandise never arrived
  2. wasn’t purchased by them
  3. or the merchandise was inferior

The merchant then must refund the cardholder and respond to a chargeback in an attempt to get their money back.

Online Shoplifting

Also known as online shoplifting; online/e-commerce transactions qualify, as well as, mail order/ telephone order (MOTO). Bottom line: If for any reason you are unable to fully inspect the card during the purchase beware!

E-commerce gateways such as Beyond One,, PayTrace, Paypal and others have additional security features that can be dialed in to cut down on the amount of fraud one may have to contend with. If you’re selling higher-quality goods that can be easily re-sold you are likely a perfect target for this type of criminal activity, though no merchant is immune!

Protect Yourself

Be diligent! Ask yourself why this customer is purchasing this item from me today? In order to properly contest a chargeback, the card brands (V/MC/D/AMEX) need to be confident that you did everything within reason to verify that the person making the purchase was the owner of the credit card used. To be clear there is no guarantee you’ll win the case. Following these simple techniques will give you the best possible chance to plea your case:

  1. Use the CNP functionality equipped on your terminal
  2. Require a callback number- call back and verify- prior to shipping the product
  3. Verify the address where the item is to be shipped, it should match the card billing address (i.e., house number and zip code)
  4. Google it! Yes, both the address and the person to look for any indication of misrepresentation. Go with your gut.
  5. Require a signature when shipping a product

Proper protocols in place when taking CNP transactions ensures all who conduct transactions are doing everything possible to avoid chargebacks in the future.

If you want to learn more about how this can affect your business, I’d love to connect. Click the button below, or learn more about me and how I can help you on my About page.

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