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Credit card fraud is an increasingly common calamity. The system checks whether the address is correct. To prevent this, there are numerous tools, systems and standards have been developed. One common method is address verification service (AVS), which helps significantly reduce fraud.
The process uses the postal code provided to verify the identity of the buyer. For this purpose, an address database is activated to verify the existence of the address. These databases are not country-dependent. Credit card providers can check the address provided with the registered address.
AVS prevents fraudsters from using stolen cards. False credit card numbers can also be identified. If the postal code does not match the data stored in the credit card account, the payment will be suspended. Only if the billing address matches the address of the credit card account, payment will be accepted.
AVS protects cardholders and online retailers. Unknowingly accepting payments from stolen credit cards leads to chargebacks, as the customers report the credit card fraud. The canceled amount is returned to the customer's account, leaving the merchant to pay for the shipped items. Chargebacks also incurs additional fees for dealers. Many traders are vigilant with this kind of fraud, which leads to hundreds of millions of euros in losses every year. AVS can prevent a large part of these fraud attempts.
The only way for fraudsters to cheat AVS is by knowing the correct address of the credit card owner. This might be the case, if the credit card has been lost along with the entire wallet. Using a different delivery address would allow the fraudster could get to the goods. Nevertheless, a large proportion of fraudulent credit card payments will be prevented, making it an effective solution for merchants to protect themselves against fraud. Another weak point is the comparison of data based solely on the postal code. Street name and number are not compared. To compensate for this, it is recommended to combine AVS with other fraud prevention tools, such as IP-geolocation.
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