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The sharp increase of online ordering, delivery services, and other internet commerce transactions is keeping some businesses afloat through the COVID-19 pandemic. BBB warns that despite the credit card companies shifting to chip-enabled cards to reduce instances of fraud, scammers still find ways to steal shoppers’ information. This presents a big issue for any business that processes the stolen card through their credit card payment system. There are a few ways to protect your small business from costly chargebacks.

One of the best ways to start is to review the agreement you signed with the credit card merchant and ask for clarification on their policy regarding fraudulent purchases; it’s important to know whether that is something they cover or if you are wholly responsible. Additionally, determine whether they require a customer to input a PIN or zip code to verify their identity at the point of purchase.

Take the time to review your own internal policies with employees and establish a set of steps to identify potential fraud. There are several red flags to watch for to help spot a potential scam:

  • Keep a close eye for unusually large orders, placed through the internet without any contact from the customer
  • Listen for a demand or repeated request for an urgent or rush order for large quantities of high-priced items to be shipped to different addresses or overseas
  • Look for transactions with similar account numbers or using multiple credit cards, all shipping to the same address.
  • Take note of multiple transactions on one card over a short period.
  • Watch to see if there are several transactions on a single card with one billing address, but multiple shipping addresses.
  • If possible, check if there are multiple payment cards used from a single IP address.
  • Orders from internet addresses that use free email services.
  • Customers requesting inventory lists with promises of placing a large order before the order is placed.
  • Orders with missing information, and/or customers who refuse to provide contact information.
  • First-time customers who exhibit some or all the signs above.

While these are good indicators of a potential scam, it’s unlikely that the presence of one indicates a stolen card or identity theft. It’s best to be vigilant and scrutinize sales that look suspect before shipping any items. If an order raises several red flags, merchants are recommended to do what’s necessary to determine that the person purchasing the item is the cardholder or an authorized representative.

  • Contact the credit card merchant immediately to report any unusual activity.
  • Try to obtain the name, address, and phone number for the cardholder if it’s not already provided.
  • Implement a policy in your online ordering process that requires customers to enter the 3-digit security code number from the back of their credit card to complete the ordering process.
  • Make an attempt to verify the billing address provided by calling the merchant bank associated with the information provided if you suspect there is a problem. If the address provided doesn’t match the address of the cardholder, don’t authorize the shipment.
  • Implement a fraud detection service that blocks suspicious transactions. Some may charge a fee, and you will want to check who is compatible with your vendors and which product/service works best for you.
  • Use an address verification service (AVS) to freeze an order when the billing address entered doesn’t match the billing address on record for the cardholder.
  • Try to reach the customer using the phone number provided. If you cannot reach the cardholder, delay the shipment until you are able to do so.
  • Investigate the address and/or phone number of any suspicious orders using reliable websites to verify a street address. In the United States, you can use the USPS website.

As a small business, connecting with customers and having a good business reputation is important, but keeping them safe can be just as critical, especially right now.

Asking important questions and being vigilant about questionable sales can help keep your customers’ information secure and keep your business in the black. When in doubt, don’t send the order out! 

Report a suspicious transaction to the credit card merchant as well as local law enforcement.


To report a scam, go to the BBB Scam Tracker. To find trustworthy businesses, go to