Prevent Credit Card Fraud: Tips to Protect Your Business
Fraudulent credit card activity has always been a concern for businesses, and there is even a greater risk of fraud for mail order/telephone order (MOTO) and e-commerce merchants.
Whether you are in a card-present or a card-not-present (CNP) environment, there are many steps you can take to decrease your chances of fraudulent activity.
Face-to-Face Retail Environments
Watch for these warning signs of fraud when your customer does any of the following:
- Purchases a lot of merchandise without concern for size, color, style, or price.
- Asks no questions about major purchases.
- Tries to distract or rush the salesclerk when he or she is ringing up the transaction.
- Makes purchases, leaves the store, and returns to make additional purchases.
- Makes large purchases when the store opens or is ready to close.
- Refuses free delivery for large items.
When accepting a MasterCard¨ or Visa¨ card for payment, pay attention to the security features on the card. Visit the MasterCard and Visa Web sites, which provide card security tips such as how to verify if card embossing or holograms have been altered or falsely reproduced. And always remember to check that the card has not expired and that the cardholder’s signature on the sales receipt and on the card match.
Card-Not-Present Environment
MOTO and e-commerce merchants need to understand that there is a greater need in this environment for fraud prevention. CNP merchants can be held financially responsible for a fraudulent transaction even if it is approved by the card issuer. Fortunately, there are ways merchants can reduce their chances of fraud.
Know the signs of possible fraud when the card is not present. Be alert for transactions with several of these characteristics:
- First-time shopper.
- Larger than normal orders.
- Orders consisting of several of the same items.
- Orders made up of big-ticket items.
- Orders shipped rush or overnight.
Maintain a customer database or account history to track buying patterns and compare individual sales for indicators of possible fraud:
- Orders shipped to a single address but made on multiple cards.
- Multiple transactions on one card or similar cards with a single billing address but with multiple shipping addresses.
- Multiple cards used for a single Internet Protocol (IP) address.
Utilizing Address Verification Service (AVS) automatically verifies that the customer’s billing address provided at the time of sale matches the billing address on file with the card issuer. This provides the merchant with extra assurance that the unseen customer is the legitimate cardholder.
Both MasterCard and Visa provide verification codes near the signature panel of their cards. When the customer provides this code to the merchant, it ensures that the buyer has the actual card in hand.
Their online security features provide consumers with added safety when shopping online and provide participating merchants with added protection from fraudulent activity.
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