Charge Verification - Fraud Library

The Fraud Practice eCommerce Fraud Consulting Services

Used by merchants to validate card member information from the issuing bank or card association by physically contacting them and asking them to validate the cardholder information.

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Used by merchants to validate card member information from the issuing bank or card association by physically contacting them and asking them to validate the cardholder information.

How Good Is It? 

The charge verification services available today do not offer any kind of guarantee for fraudulent transactions. They provide extra security for accepting orders, allowing you to confirm more of the consumer’s data. There is significant difference between the card types and the ability to call and confirm consumer’s data. This ranges from the Visaand MasterCardCode 10 procedures or American Expresses Charge Verification Program to manually contacting the issuing bank of the consumer’s credit card for validation. Merchants are really just trying to confirm if the cardholder information they have is the same data the bank has on file. If a merchant can confirm the billing data with the issuing bank they should still confirm the order with the consumer to create the complete loop.

          Charge verification:

• Offers no guarantee on charge-backs

• Cannot be automated

• Has different rules and levels of service for each card type and bank

• Will not always contact the card member on file to validate the order — only American Express’s program offers this at this time

Considerations When Implementing or Buying This Functionality   

• Time-intensive process — adds at least 24 hours to the processing time to accept the order

• Who will place the calls?

• How will responses from the banks or institutions be handled?

• How will orders be selected for this process?

Estimated Costs – The merchant will have to have manpower ready to handle the calls. Costs will be directly in response to the number of orders taken and the number of orders that will require call backs.

Alternative Solutions – Use an automated process such as fraud screening, Advanced Address Verification Plus by American Express, or third-party consumer authentication services. Reverse lookups.

Vendors – American Express, Visa, MasterCard, Discover Card.

How Does it Work? 

Technically a merchant is only supposed to call these numbers if they suspect fraud, but that is a very “qualitative” standard. So as a general rule, if a merchant wasn’t going to take the order due to the checks they already did, then they should perform this check so they can at least try to convert the order.

Each Credit Card type is a little different on their rules for charge verification, so check with an acquiring bank on what processes they recommend for each.

American Expressoffers a Charge VerificationGroup that will attempt to verify the purchase for a merchant. 

• Must be a card-not-presenttransaction

• Physical goods only, with value greater than $200

American Express  will contact the card member to confirm the sale. The American Express representative will reply to the merchant with a yes or no response. (Note if American Express cannot reach the card member the merchant will not get a response)

How Do I Use the Results? 

Based on the response a merchant gets, they will have to decide if they want to accept the order. Remember they cannot validate shipping information, only the billing information. If they used American Expressand they got a confirmation from the card member, they should accept the order. If they were able to confirm the billing information with the bank, then call the card member directly and validate the purchase with them. Don’t call the card member first, they may have given bogus information in the order. When calling a consumer where you suspect fraud, always confirm the phone number with the issuing bank and use only that number to contact the consumer.

Building This In-House 

Set up a person or team of people to conduct the charge verification process. Be sure to document the process and steps the team members should follow in doing the charge verification. Documenting the process and steps for verification is important, even in a one-person shop, to make sure nothing is overlooked. As a general rule, fraud review personnel can always do more than what is written down, but never less.

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