What retailers need to know about credit card fraud

For retailers, credit card fraud is a constant reality and with the slow integration of Chip and PIN technology fraudsters continue to target our industry. While it is not always possible to prevent all payment card fraud from happening; education and awareness is the best defense to avoid being a victim – and ultimately reduce your losses.

There are several ways credit card fraud can happen: A credit card is lost or stolen and used to make purchases. A fraudster obtains a credit card number and expiry date; then uses this information to make purchases over the phone or on-line. Or by fraudsters tampering with a payment terminal and obtaining credit card information to create a counterfeit card – this is usually the work of professionals.

Developing a credit card acceptance policy and posting signage (ex. Fraud Prevention Program in Effect) to notify potential fraudsters that your business has a formal process when accepting credit cards is a good start. But, the crucial step is to educate your staff and have them understand and follow the procedures; especially for those multi-unit retailers–if a fraudster is successful at one location, they will visit other locations thinking you are an easy target.

Here are two basic steps to follow when accepting a credit card. Compare the credit card to the sales receipt and verify the following:

1. Does the signature on the credit card match what was signed on the sales receipt?

2. Do the last four numbers on the credit card match the last four numbers printed out on the sales receipt? This is the best way to identify a counterfeit (compromised) card. Professional fraudsters will have matching identification to accompany the credit card, so if these numbers DO NOT match you know the card is fraudulent. The best way to handle this situation is to advise the individual you need to call for authorization–at this point the fraudster knows they have been discovered and will leave the store.

As an added layer of security, implement a practice that any credit card purchases over $75.00 requires a valid piece of identification (ex. Drivers License) from the customer to verify the authenticity of the card holder. This will assist in identifying those fraudsters who are using recently stolen credit cards to make quick purchases of high value (ex. lottery, gift cards and tobacco products).

This information is provided to make you aware of the many ways that fraudulent activity occurs, what to watch for, and the things you and your employees can do to protect your business.

Remember, education and awareness is your best defense.