If you are a merchant, particularly someone who sells products online, the chances of your business being exposed to credit card fraud is highly likely. For many businesses, credit card fraud is a cost that they apportion into doing business and they may even account for it in how the price products - similar to how a business may account for bad or doubtful debts. In the UK for example, government published statistics reveal that credit card fraud has went up from £83.3m 10 years ago to £504.8m just before the introduction of the chip and pin scheme. Chip and pin is a system where by a number is assigned to each credit card, meaning a thief has to do more than just fake a signature to complete a purchase with someone else's credit card. This has been said to have reduced fraud by 13% since its introduction.
With so many different types of credit card fraud, it is important to have a strategy to address each one. This article offers an insight into prevention methods for well known techniques of committing credit card fraud.
Card Not Present Fraud
CNP fraud is among the fastest rising category of fraud. The main reason for this is that it is becoming much harder to commit fraud in person, especially with the introduction of Chip and Pin. As online credit card fraud increases there are some measures that all merchants can take to ensure their associated costs of being exposed to online credit card fraud can be reduced.
● Call back customers to confirm orders. Although this is also a cost center, it could be used as a technique when the transaction appears somewhat out with the ordinary
● Pay attention to transactions where the delivery address and cardholder address are different
● AVS or CSC verification doesn't remove risks 100% but it removes the ability for fraud to be done base solely on acquiring account details with out having the credit card in person.
Card Present Fraud
Card Present Fraud has become increasingly hard to commit, and as a result it is no longer associated with being a white collar crime as is often the case with CNP fraud. Despite this, face to face or swiped card fraud can still be an issue which retail merchants still have to deal with. Following certain protocols can help to limit the chances of you being affected, and ensure that your business is refunded by following the correct procedures.
● Train employees to be on the look out for people who appear nervous or uncomfortable. They should not confront then based on that alone, but they should certainly be discreetly vigilant when they do.
● Check that the card number that is embossed matches the card number on the receipt. Pay particular attention to the last 4 digits if this has to be done discreetly and promptly. If they are different then it is important to act. In situations like this it is likely that skimming has taken place.
Finally, large orders from overseas countries with US Billing address are almost always fraud so it's better to have these customers pay via western union or bank wire. Many times fraudsters will order a large order using a stolen credit card and by the time you've discovered the card is stolen you already shipped the order.
Mike Knudtson is the co-founder of the Payment Gateway Fastcharge.com and the founder of merchant account provider Electronic Transfer, Inc.. He has helped thousands of merchants set up retail and ecommerce payment processing for their business. Electronic Transfer, Inc. is one of the leading merchant account companies serving merchants since 1989.
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