Fraud Prevention Resources

Transaction fraud happens when someone makes a purchase or payment using false or unauthorised information—like a stolen credit card, fake identity, or hacked account—without the rightful owner’s permission. This type of fraud can occur online, over the phone, or even in person, but it’s especially common in card-not-present transactions (like online shopping).

A Customer Not Present (CNP) transaction occurs when the cardholder is not physically present to complete the payment, such as during online purchases, phone orders, or mobile app transactions. In these cases, you as the merchant rely on the customer entering their payment details like the card number, expiration date, and billing address to authorise the transaction. Since there’s no physical card to verify, CNP transactions carry a higher risk of fraud and chargebacks. To protect your business, it’s important to implement strong security measures such as AVS (Address Verification System), CVV checks, and 3D Secure authentication.

A MOTO payment stands for Mail Order / Telephone Order payment. It refers to a type of card-not-present (CNP) transaction where a customer provides their payment details over the phone or by mail, rather than in person or online. As a merchant, you manually enter the customer’s card information into your payment system to process the transaction. Because there’s no physical card present, MOTO transactions carry a higher risk of fraud and chargebacks, so it's important to follow security best practices—such as verifying customer details and keeping detailed transaction records.

MOTO payments are more susceptible to fraud because the cardholder is not physically present during the transaction, making it harder to verify that the person providing the card details is the legitimate owner. Since the payment information is given remotely—over the phone or by mail—fraudsters can more easily use stolen card data without being detected. Additionally, because these transactions often bypass some security features like chip readers or contactless verification, there’s less protection against unauthorized use. This higher risk means merchants must be extra vigilant by implementing strong identity verification, maintaining thorough records, and using fraud detection tools to help reduce potential losses.

For Card-Not-Present (CNP) transactions—like online, mobile, or phone orders—the absence of a physical card creates more opportunities for fraud. Below are the most common types of fraud in CNP environments, especially relevant for eCommerce and digital merchants:

1.Stolen Card Fraud (Classic Payment Fraud)

• What happens: A fraudster uses stolen credit card details to make unauthorized purchases.
• How they get the info: Phishing, data breaches, dark web, or skimming.
• Red flags: High-value orders, expedited shipping, mismatched billing/shipping addresses.

2. Card Testing Fraud

• What happens: Fraudsters test stolen card numbers by making small purchases to see if the card is active.
• Why: If successful, the card will likely be used for larger fraud later.
• Red flags: Multiple small transactions in rapid succession, often under £1, with different card numbers.

3. Account Takeover (ATO)

• What happens: A fraudster gains access to a customer’s account and makes purchases using stored payment methods.
• How: Through stolen credentials (phishing, credential stuffing, etc.)
• Red flags: Sudden changes in address, email, or purchase behavior; login attempts from new IP addresses or devices.

4. Friendly Fraud (Chargeback Fraud)

• What happens: A legitimate customer makes a purchase, then disputes the charge with their bank claiming they didn’t authorize it.
• Intentional or accidental: Can be deliberate or due to confusion (e.g., a family member made the purchase).
• Red flags: Repeat chargeback behavior, customer claims item never arrived despite confirmed delivery.

5. Refund Fraud

• What happens: A fraudster requests a refund to a different payment method or claims a fake issue with the product/service.
• Example: Claims an item was never delivered or was returned when it wasn’t.
• Red flags: Requests for refund to alternate cards or unusual email tone/content in refund requests.

6. Synthetic Identity Fraud

• What happens: A fraudster creates a new identity using fake and real data (e.g., real SSN + fake name) to open accounts and eventually make fraudulent transactions.
• Common in: BNPL (Buy Now, Pay Later), financing platforms, or high-value purchases.

7. Interception Fraud

• What happens: The fraudster places an order with a stolen card and then contacts customer service to change the delivery address after the order is placed.
• Red flags: Requests to reroute packages, especially to shipping lockers or third-party addresses.

Liability for fraudulent transactions depends on the type of transaction and the payment method used and there can be exceptions to the liability rules however generally:

Mail Order Telephone Order

Liable party – Merchant

Online and Pay by Link payments taken using 3-D Secure

Liable party – Issuing Bank

Online and Pay by Link payments taken without using 3-D Secure

Liable party – Merchant

Manual Keying of card details into payment terminal or online system

Liable party – Merchant

Signature only cards

Liable party – Merchant

Contactless payments

Liable party – Issuing Bank

Chip and Pin

Liable party – Issuing Bank

Customer Present Transactions:

To ensure liability shifts to the card issuer, the cardholder must use their card in person, either through contactless payment or chip and PIN. These methods provide strong authentication and reduce your risk of fraud.

If you accept signature-only payments, we recommend always verifying a valid form of ID to help confirm the cardholder’s identity. However, please note that liability for fraud still remains with the merchant in these cases, meaning you may be responsible for any losses.

Customer Not Present (CNP) Transactions:

For transactions where the cardholder is not physically present, such as online purchases or Pay by Link payments, we strongly recommend using 3D Secure (3DS) authentication. This additional security layer helps confirm the cardholder’s identity and enables liability to shift from the merchant

to the card issuer.

• Unusually large orders or orders for multiple quantities of the same item
• Several orders received within a short space of time, often in increasing value
• Orders using multiple credit cards, especially where the first 12 digits of the card are the same and only the last four are different
• Orders requiring ‘urgent’ shipping or delivery to a Post Office box or third party
• Orders from someone who is not the owner of the card
• The cardholder claiming, they cannot provide the CCV
• AVS mismatch on the Billing address provided
• Different shipping and billing address

If any of the above indicators are present, we would always encourage you to exercise caution. If you’re not satisfied that a payment is genuine, ClearAccept recommend that the goods and services are not provided and that the payment be refunded immediately

If any of the above red flags are present during a transaction, we recommend that you complete additional due diligence by:

Requesting a short video of the card holder confirming their name, holding their credit card AND obscuring part of the card number along with a picture of their photo ID showing their address.

This allows you to evidence the cardholders identity and confirm the address to which the credit card is registered and to which you are shipping. For genuine customers, this will take less than two minutes. For fraudsters, it’ll put them off entirely.

Always ensuring the billing address and delivery address are consistent and that the AVS check matches.

If there are any concerns regarding any transactions, then the goods and services should not be provided and the payment should be refunded as soon as possible to prevent any potential chargebacks.

If any of the above red flags are present during a transaction, we recommend that you complete additional due diligence by:

Request Identification from the customer and verify this matches the name on the card.

Verify that the signature on the ID and card are consistent, and pay attention to the customer's behavior—hesitation, nervousness, or avoidance of verification may indicate fraud.

If you still have concerns, ask for an alternative form of payment or suggest processing the transaction using chip and PIN rather than relying on a signature.

If you are still unsure then decline the transaction to protect your business. Always prioritise safety over completing a potentially risky sale.