Card-not-present (CNP) transactions are considered high risk because neither the card nor the cardholder is present, so the seller is unable to check the physical security features of the card to determine its authenticity.

In addition, without a Pin or signature it is impossible to confirm that the customer is the genuine cardholder.

Mark Bowerman, spokesman for Apacs, says the problem is further compounded because card issuers cannot guarantee the information provided during a CNP transaction relates to the genuine cardholder.

‘Card issuers can only confirm that the card has not been reported lost or stolen and that there are sufficient funds available in the account,’ he says.

‘The onus is therefore on a merchant accepting a CNP transaction to ensure it is genuine. If the transaction turns out to be fraudulent, the merchant is liable not only for the losses but also for any associated administration charges.’

Bowerman says criminals are becoming increasingly comfortable using the internet, making it the fastest growing medium for CNP purchases. ‘The internet provides anonymity for fraudsters,’ he says. ‘To combat this, merchants have to know their customers and get as much information as possible from them in order to guarantee that they are dealing with a genuine cardholder and card.’

Apacs has drawn up a list of 10 questions – available on its web site www.cardwatch.org.uk – that it recommends retailers ask before accepting a transaction.

These questions concern issues from new customers buying high-value or resalable goods, to purchasers providing details of other people’s cards or even being reluctant to give a traceable landline phone number.

‘While negative answers to these questions don’t always mean that a transaction is fraudulent, they should at least raise awareness of the possibility,’ says Bowerman. ‘In such cases, a merchant has the choice to hold the goods and get in touch with the customer using an alternative contact method in order to ask further questions, or to turn down the transaction altogether.’

He says that criminals are also experts at creating fake drop-off addresses, often doing so by trawling estate agents’ boards looking for empty houses or using a block of flats with many separate addresses.

As the delivery arrives, the criminal miraculously appears ready to intercept the goods before they reach the front door.

‘Merchants are becoming wise to this and are starting to insist that goods are only delivered to the cardholder’s permanent address and that they are handed directly to the addressee on receipt of a signed and dated delivery note,’ says Bowerman.

But with caution, common sense and the practical advice available from Apacs, retailers can significantly reduce their incidence of CNP fraud.