I would like to hear about multiple ways to prevent consumer credit card fraud which can hurt merchants' that push their product through affiliate networks. The fact is, many of networks will make advertisers responsible for affiliate commissions even if transactions are charged back due to credit card fraud. From all I know, it can cause huge losses. So, credit card verification should be made before the tracking pixel is fired. Question: How do you do transaction legitimacy verification, besides making customers enter their 3 digit security code?
The best way is to stop using real time payment gateways and get a manual payment gateway. This way you are in control as to which transactions get approved or denied. With real time gateways you have no choice, hence the ever increasing fraud through illegitimate charge backs.
I agree with above, decide for yourself whether you want to sell to a particular customer and use common sense to sniff out possible fraud. You can even go a step further and decline to sell to notorious fraud areas.
but how do you qualify the customer? What are the measurements accordingly to which i can assume it's a fraud?
Do you do an AVS check on the billing information submitted? And then cross-match with the WHOIS information on the submitting-IP address?
I like what gotlivechat is suggesting. To add to that, I would recommend maxmind geo database to further matchup details between visitor and purchaser. And telephone verification where the purchaser gets an automated call back to prove their contact details are valid.