How to Protect Your Business Against Credit Card Fraud

Whether you operate a bricks-and-mortar store, run an online retail business, or — like many GoPayment clients — serve your customers in the field, credit card fraud can be a real problem. Fortunately, by using existing built-in systems and by being more aware of scam artists’ tactics, you can protect yourself. Here’s how.

1. Look closely at customer cards. Credit card fraud frequently involves the use of lost, stolen, or counterfeit cards. Take a moment to scrutinize every card that’s handed to you. Ask customers for some form of government-issued identification, not only to make sure the photo ID matches the person with whom you’re dealing, but also to compare signatures on the cards. Check the credit card’s expiration date, too.

Next, examine the card’s signature strip. Is it smeared or otherwise unreadable? This might suggest an attempt at forgery. The same goes for the numbers on the card. Does anything appear to be altered? Reject credit cards that aren’t signed — and always get the customer’s signature on the sales slip.

2. Use credit card verification systems. The Address Verification Service (AVS) is an effective anti-fraud tool that enables you to authenticate the identity of people who hand you credit cards. AVS validates the numeric parts of the cardholder’s billing address, the ID number located on the signature panel and the card’s expiration date. If your AVS check suggests a problem, call the issuing credit card company and ask for a “Code 10″ authorization. The credit card company will guide you through a series of “yes” or “no” questions to help determine how to proceed, without alerting the customer.

The Card Verification Value (also known as CVV, CVC, and whole bunch of other acronyms) system helps to prevent thieves from using credit card numbers they’ve generated from fraud attacks and security breaches. The system, which appears as a three- or four-digit code (usually on the back of a credit card), enables retailers to authenticate the identity of the person who’s making the purchase.

All major credit card issuers have incorporated unique features to help identify and prevent fraud. It’s worth your time to visit card-issuer websites (Visa, MasterCard, American Express, etc.) regularly to keep current on the latest technologies and features.

3. Observe customer behavior. When you’re handed a credit card for processing in the field, beware of customers who:

  • Take a credit card from a pocket instead of a wallet or a purse;
  • Rush to get through the transaction;
  • Can’t provide additional identification;
  • Ask a lot of questions about refunds or authorization limits;
  • Provide information that doesn’t match the card-issuer’s records;
  • Use a new card to purchase large-ticket items;
  • Buy an unusual variety of items or items of widely varying prices; and/or
  • Ask for a cash refund on a credit card transaction.

These are all warning signals of fraud, so trust your instincts if you detect any suspicious behavior. If for any reason you feel your safety is at risk, decline the transaction and return the card.

It’s up to you to keep pace with changing technologies designed to fight the newest form of fraud. In the meantime, careful first-hand observation and savvy use of existing anti-fraud systems are bound to save you a considerable amount of time and money.

About Lee Polevoi

Lee Polevoi is an award-winning freelance copywriter and editor and a former Senior Writer for Vistage International, a global membership organization of chief executive officers. He writes frequently on issues and challenges faced by U.S. small businesses.
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