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How Business Owners Can Decrease the Chance of Fraud When Accepting Credit Cards

Credit card fraud and fraudulent card returns can be debilitating and costly to any business, but it hits especially hard for smaller business owners. Not only does it put customer information at risk, it potentially places sensitive employee or company information in the wrong hands as well. The good news is that there are a lot of things that can be done to mitigate the potential for fraud as you are accepting credit cards at your store or shop. For the most part, you can spot fraudulent behavior before any criminal activity or theft actually occurs.

Thankfully, many advancements have been made to reduce in-store fraud, and the implementation of chip technology has helped to decrease efforts of fraud as well. In fact, the chip technology is said to be so secure that, as of October 2015, credit card companies will assume liability if any fraud occurs for in person transactions utilizing an EMV compliant device.

Let’s talk about some of the things to look out for in terms of credit card fraud when it comes to your card reader while in a brick-and-mortar store. First and foremost, you and your employees or your team should know the signs of a fraudster before the actual criminal activity happens. It’s better to prevent it in the first place! Any customer that is exhibiting some strange behavior should set off some immediate red flags, but in case you need a refresher, here are some things to look out for.

Suspicious Behavior:

  • Any customer appearing uncomfortable, constantly looking behind their shoulder

  • Someone attempting to very quickly finish their transaction or appearing anxious

  • A customer who checks the name/signature on the back before purchasing

  • A person who doesn’t have a card on hand, but can tell you a card number

  • A customer who completes a purchase and returns shortly after to make another

  • Someone who shops right before store closing, or shortly after opening

  • A customer who is trying to distract the cashier/clerk from the card

  • A person who shares that their card has been giving them “problems” or “trouble”

  • Anyone who buys a very large number of expensive items, jewelry, or purchases clothing without paying much attention to the sizes and costs of their items

Of course, any of the above displays of behavior can be completely normal. A customer spending a high dollar amount or making multiple trips to the store does not mean they are attempting to conduct criminal activity. However, if someone is exhibiting one or more of the characteristics above, your team of employees should know what to look for and to exercise caution when necessary.

Watch Out For Fake Cards:

Another sign of fraud is a card that doesn’t quite look right. Fraudsters will frequently copy and emboss card numbers onto a different card. Looking at the actual card is a key step to take before processing a transaction, in any situation. This remains especially true if the customer has exhibited any of the behaviors listed above.

For example, it may be something that is often overlooked and easily forgotten, but all American Express cards begin with a 3, Visa cards start with the number 4, Mastercard with 5, and Discover cards with the number 6. So if you see an American Express card that starts with the number 5 or 6, you and your employees can spot that it’s a fake before the transaction is processed. Additionally, if the signature strip is smudged or scratched, or the mag stripe appears ruined, these are further warning signs that the card may be a fake. Major credit card companies also have a hologram on their cards, and tilting the crd and looking at it under light should help you further determine the card’s authenticity.

When in doubt, train your employees to ask for identification from customers. This allows for dual verification – that not only does the person in front of you match the image on the driver’s license, but the name and signature match on both the card and the identification. While this can be seen as a hassle for customers on a daily basis, you can remind them that it is your highest priority to keep your customers protected from fraud and that it is important for you to keep their information safe.

Education Is Key to Prevention:

Ultimately, the best way to prevent any credit card fraud is to ensure that you and your employees are trained properly to look for warning signs, and will ask the right questions in order to keep your customer information safe and avoid fraud entirely. Don’t allow customers to bully your employees into completing transactions if they don’t feel comfortable. Remind your team that they are the first line of defense when it comes to processing card transactions. They are responsible for recognizing the red flags that accompany a fraudulent transaction. Empower them to trust their gut instinct when it comes to something they feel may not be right.


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