Reader Problem: The Legit Order That The Computer Thinks Is Fraudulent

Written by Evan Schuman
November 30th, 2006

This is a different kind of blurb. Received an E-mail from a reader that I’d like to throw up to the group for advice. Any takers?

Here’s what your fellow reader/fellow retailer wrote: “A customer places a order for a Laptop through our eStore. The order was rejected due to the store not being able to verify his billing address. The customer was upset and continued to contact us over a months time. As it turns out, he is from Costa Rica, in the US working. The rub here comes from the way the credit card companies operate (or don?t operate) in South America. The CC?s are not allowed to be banks in these countries, but work somewhat like a check card here in the US. BUT the cards are processed in the same manor as in the US, when they are used here.”

“So to return to the story, when he pressed the order button, the eStore ran an authorization using the card number and the billing/shipping address he enter. When the address could not be verified the order was rejected, but the authorization can not electronically be retracted. Since the issuing bank is out of Costa Rica, the authorization is treated as a sale, since they do not do authorizations in CR, only sales, and the money was removed from the customers account. Where it goes, no one really knows.”

“The customer has sent us his online bank statement showing the transaction for the authorized amount, correspondences he has had with his bank and given us contacts in Costa Rica, but we STILL have not resolved the issue. The customer tells us ?they (the bank) do not believe you?. The strange thing is that the bank does not KNOW that we did not process a sale, but simply an authorization.”

What would you do?


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.