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Fraud Prevention In a Business

Tips for businesses to protect themselves against Internet fraud.

Credit Card Scams

Some people buying on the Internet are not honest. The most common method is to use a stolen credit card. Savvy business owners suggested the following tips.

  • Always be tactful with your customers as they may have accidently given you an incorrect digit.
  • If you are shipping to a different address than the credit card billing address, always do additional checking.
  • If the order is greater than $100, go to the credit card bank and have them call the card holder to see if they did indeed order.
  • Be extra careful if sending to Chicago IL, New York City NY, Jacksonville FL, Canada (especially Eastern Canada), Bulgaria, Nigeria and Romania.
  • Always manually check orders from free email accounts such as hotmail.com.
  • Waiting 24 hours after an order is placed to contact your authorization service can help. Stolen credit cards are often reported within 24 hours.
  • In some cases, crooks are giving the correct address and then intercepting the package at the package destination.
  • Have buyers of questionable orders fax either a photo of the credit card OR a xerox of his/her credit card billing. In return, offer a discount on the merchandise. This is a great verification mechanism for people ordering from areas with a high credit card fraud rate.
  • Never send credit card numbers by email. This will help prevent honest people from getting their credit card numbers stolen.
  • Paypal actually protects you from a good amount of fraud as a business owner. If you do not currently accept Paypal, they are very helpful, low cost and reliable.

Mail Tips

Small businesses often like the ease of priority US mail envelopes. However, even without the business name on the envelope, vendors are finding that packages are reported to be missing a large proportion of the time.

  • Always insure US Mail packages (or send them certified, which is more affordable) or use another shipping vendor. Private shippers have enough tracking that missing packages are recovered.
  • Leave the word "jewelry" off your mailing labels. Company initials work well.
  • Never send COD through US Mail as you may not get paid. (Packages have been left without funds being collected.) Using another carrier has worked reliably for others.
  • Collect zip codes of mailed packages that do not make their destination. Then, contact the postmaster of that area.
  • Having the customer sign for packages that are placed on a credit card really helps if the credit card company asks for proof.

Bad Checks

Bad checks aren't as prevalent on the Internet as they used to be, but the problem still exists.

  • If you post that you will wait for the check to clear, this often avoids the problem.
  • If you actually wait for the check to clear as well, the worst that happens is a bounced check fee.
  • Try to call banks on larger checks to make sure funds are sufficient before depositing them. (Some banks now charge for this; ask if there is a fee first.)

General Advice

  • Know your inventory. Jewelry Inventory Software can help you if needed. This way you will know if something has been taken. Watching inventory and accounting for it often prevents at least some issues.
  • Don't send out any products until they are paid for.
  • Be cautious of large orders with requests to ship next day. These may be real, but most people watch their money.
  • Most US fraudulent orders occur between midnight and 2am PST
  • Be wary of large orders of the same item (unless you are a wholesaler). Do additional checking.
  • If you are selling on commission, be certain to have an inventory and a contract.
  • Make sure you know your vendors. For example, if someone else is drop shipping your product, make certain that they are trustworthy and reliable.
  • Document what you send. A $16,000 Rolex was shipped and placed on a credit card. The customer then returned a fake Rolex. Business owners will often loose this battle to the buyer through the credit card company unless extremely well documented. Don't let this happen to you. [Replacing diamonds with CZ is also popular.]
  • Join mailing lists like Jewelcollect where vintage jewelry dealers swap information. [Listed under Clubs/Education on side frame.]


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For craft business tips see, craft scam prevention and tips.