The statistics are staggering. According to The Nilson Report, in 2018 credit card fraud losses in the U.S. totaled $9.47 billion. That’s about 10.83 cents in fraud loss for every $100 in cardholder spending!
Luckily, a great deal of credit card fraud can be avoided if you are vigilant. Train your staff to watch for these red flags:
- Credit card doesn’t work in terminal – Often someone will come in with a credit card that doesn’t work when you go to swipe it or insert the chip into your processing terminal. When the error message comes up, they’ll say, “Oh, my strip is bad, just go ahead and punch it in.”
Don’t do it. Instead, take a close look at the card’s magnetic strip and/or chip. If the strip on the back is all scratched up, or if perhaps there isn’t even a chip, there’s a good chance this is a stolen card.
Criminals will often take a blank credit card and imprint it with the information from another card. Then they scratch up the magnetic strip to ensure it won’t work, since that’s an element that they cannot forge.
- Customer has no wallet or purse – Be wary of customers who simply pull their credit card out of their pocket, and do not appear to have any other money or identification with them. In this situation, the cashier should insist on seeing the customer’s ID.
In fact, ideally you should have an ironclad policy that every time a credit card is taken the cashier asks to see the customer’s ID. The credit card processors actually encourage this, as it is a key measure for avoiding fraudulent purchases.
- Customer’s gender doesn’t match gender implied by name on card – The credit card is for Susie Jones, who is highly likely to be a woman, and the person standing in front of you is clearly a man. Once again, ask to see the customer’s ID. Better yet, ask for two forms of ID.
What if this male customer claims to be Susie’s husband, boyfriend, brother, son, etc.? Don’t accept the card. If someone comes in with a credit card that is not in their name, you as a merchant are not required to accept it.
- Customer’s ID doesn’t match name on card – This is a huge red flag for credit card fraud. The whole point of checking the customer’s ID is to ensure that the name on the ID does match the name on the card, and that the customer’s face resembles the photo on their ID. If things don’t match, don’t process the transaction.
- Customer wants to make a large purchase over the phone – As we’ve written about before (See “Think Twice before Taking a Credit Card Payment over the Phone ”), criminals will use a stolen credit card to make a big-ticket purchase over the phone, causing the merchant to be out for the cost of the purchase as well as the merchandise itself. It’s best to avoid these sales altogether.
Want to talk to an expert to ensure you’re taking all the appropriate precautions to avoid credit card fraud? Give us a call. We’re here for you.