Ice.com takes a proactive role in thwarting card theft

When credit cardholders first realize their card or card number has been stolen, their first call is usually to their financial institution, which then cancels the card and begins tracing the bogus transactions.

But Ice.com, the 178th largest online retailer, according to the Internet Retailer Top 400 Guide to Retail Web Sites, believes that web merchants can also play a more proactive role in helping to eliminate card fraud and identity theft.

For instance, in late 2003 Ice.com developed a program whereby its fraud prevention and risk management department would actually call the cardholder and notify him or her that their card number had likely been stolen and a criminal had attempted to use it to make an online purchase.

In 2004, on transactions that ranged in size from $800 to $1,120, Ice.com made nearly 400 calls to cardholders notifying them that an unauthorized party was likely trying to use their card number to purchase jewelry, says Ice.com vice president of risk management Ezzie Schaff.

“It’s an industry service and something we can do as a retailer to help prevent fraud,” Schaff says.

After Ice.com’s risk management, identity and address verification programs flag a purchase as being a likely incident of fraud, the web retailer next uses other verification methods to identify the real cardholder’s address and phone number.

If Ice.com is more than 90% certain that the card purchase is illegal and that card information has likely been stolen or compromised, the retailer will call the legitimate card holder or their financial institution and notify them that someone else is likely using that card number to purchase jewelry online.

“We have a script we use that tells the true cardholder who we are and why we are calling,” Schaff says. “We also tell them to call the bank card company or their financial institution to see if there are other potentially fraudulent purchases on their card.”

Ice.com uses programs that can compare shipping addresses to cardholder addresses and other tools to flag fraud and identity theft.

The web retailer doesn’t use its notification program as means to generate sales, but the program does generate goodwill and better customer service, Schaff says. “As far as we know we are the first to add this type of notification to our fraud prevention program,” he says. “It’s something we can do to help fight the problem.”