Merchant Credit Card Fraud: How to Minimize

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Unfortunately, the current environment – COVID, financial crisis, etc. has led to an increase in credit card fraud.  Credit card fraud affects the person whose identity or credit card was stolen and affects the merchant as a chargeback and has a possible negative impact on the merchant’s reputation.  Products and services bought with counterfeit cards or theft by deception (receipt of product but still filing chargeback) are becoming more prevalent.  Some are even ‘friendly fraud’ where the goal is instant gratification and no hassle return/payment.

Credit card fraudsters work to trick merchants in a variety of ways when in the store.  The fraudster is usually relaxed, may come in with a ‘fake family member’ to appear more legitimate, and often is very complimentary.  They are professionals at their scheme.

Steps the Merchant Should Take:

  • Use the card chip reader for all transactions – by using the EMV Chip Reader, liability for a fraud transaction will be with the card issuer and not the merchant (near field communications is also ok where the customer waives their card or smart device)
  • Be wary of a customer who says their chip is mal-functioning and requests that you run the card swipe or manually enter (key enter)
  • Take extra steps if you must take a swipe or manual transaction (these will not guarantee that you may still get a chargeback and are not fail safe to ‘win’ the chargeback, but it is your best defense)
    • Get an imprint of the physical credit card (best) or get a copy of front/back of the physical card.
    • Inspect the card (4 CP Acceptance Steps for Maximum Fraud Prevention).
    • Have the customer sign the invoice (best if invoice details all products/cost and not just a final cost).
    • Get a copy of the purchaser’s driver’s license – match the signature on the driver’s license to the back of credit card as well as the signature on the invoice.
    • Enter all prompted information into credit card terminal – street address, zip, cvv, expiration date.
    • Take a picture of the delivery site – show in the picture the product and location/address where the product was delivered.
    • Understandably, you as the merchant may be reluctant to ask so much of your customer, realize that a ‘real’ customer will understand the need and that a push back may be a red flag.

Additional Information from Card Networks:

Jennifer Autian is the founder of TCA Business Solutions and an independent representative of merchant services. Connect with her at 678-523-8760 or Jennifer@tcabiz.com

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