Merchant Services 101

Credit Card Fraud and How Your Small Business Can Fight It

Fraud is a big problem for any business. But, there are things you can do to fight fraud and prevent it from becoming as large of a problem for your small business. How big of a problem is fraud? According to Intuit QuickBooks, fraud results in global revenue losses of nearly five percent of worldwide revenue, approximately $3.7 trillion each year. Even more alarming is the fact that small businesses suffer greater monetary losses from fraud than larger organizations.

Fraud Warning Signs to Consider

Visa cautions businesses that the following warning signs may be indicative of fraudulent intentions by shoppers and that these are the types of purchases that should be authorized with caution:

  • First-time customers. People you are unfamiliar with.
  • International shipping addresses.
  • Larger than average orders.
  • Multiple credit card transactions originating from a single IP address.
  • Multiple transactions charged to one card in a short timeframe.
  • Orders including multiples of the same items.
  • Orders placed online using free email services.
  • Orders requesting rush shipping or overnight shipping.
  • Orders that have a large number of expensive items.
  • Transactions containing similar account numbers.
  • Transactions placed on multiple cards all shipping to a single address.

Using the right tools for preventing fraud can help you avoid many potentially fraudulent transactions.

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Ways to Prevent Fraud

Because fraud is so prevalent today there are different steps to keep in mind for preventing fraud when cards are present for the transaction verses occasions when there is no card present.

Preventing Fraud When the Card is Present

These are a few things you can do to help reduce the likelihood of fraudulent credit card purchases when the actual card is present:

  • Check that the ID name matches the card and that the signatures match.
  • Look for appropriate security features, like holograms, on the credit cards.
  • Verify that the card remains unaltered.
  • Double check the name, last four digits of the card, and signature on the receipt to make sure they all match.

Little things like these allow you to prevent fraud or catch would-be thieves in the act.

Preventing Fraud in Card Not Present Transactions

In card not present transactions, your ability to prevent fraud is somewhat limited. That doesn’t mean there isn’t anything you can do. In fact, requesting the verification code for the card can be an important preventative measure as can checking for invalid or missing expiration dates—as they often indicate the customer doesn’t have the actual card in hand. When this occurs, request more information before authorizing the transaction.

Fraud Prevention Tools

There are several tools at your disposal to assist you in your efforts to prevent fraud when customers make purchases in your store and on the world wide web. They include things like:

  • Address verification services
  • EMV chip terminals for more secured transactions
  • Card-issuer fraud prevention tools available through most high-profile credit card companies
  • CVV numbers (these are three-digit codes on most cards, though CVV numbers on American Express cards have four-digit codes)
  • Use only PCI compliant merchant services

Ultimately, you should contact your credit card processing service if you feel you’re dealing with a potentially fraudulent situation, to request a Code 10 authorization. It’s a subtle means of alerting your processor that suspicious activity is going on.

To work with a credit card payment processor that offers a wide range of fraud prevention tools and products, you want to make sure you’re working with BankCard Services for your payment processing needs. Contact us today to learn more about our free equipment, transparent policies, and pricing for month-to-month services without long-term commitments, as well as the tools we make available to you to help in your fraud prevention efforts.

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