Fraud such as Credit Card Fraud etc has existed as long as humans have bartered and paid for goods and services. Some people take advantage of businesses and service providers, but you don’t have to resign yourself to fraudulent transactions that impede your cash flow.
Now that credit card companies issue EMV cards, thieves can’t just clone data from magnetic strips. Instead, they’ve turned to card-not-present transactions, such as those that occur over the internet or telephone. If you accept remote payments, you can take steps to protect yourself against increased credit card fraud.
Image via Flickr by Sean MacEntee
One way to protect your retail business from online credit card fraud is to set limits on credit card purchases. For instance, you might decide that a single account can only make two purchases today, and that the combined transactions cannot exceed $2,000. That way, you limit your liability and potential losses.
Thieves often try to make as many transactions as possible right after they steal cards. They know that the cardholders will cancel their accounts eventually, so they need to move quickly if they want to steal merchandise. If you set limits, thieves might still make fraudulent purchases, but you’ll control the amount.
Additionally, if you notice multiple attempts to make transactions, investigate the activity immediately, even if your system denied some or all of the payments. Don’t wait for a charge back or a consumer complaint.
Demand More Information
When customers make online purchases, you control the amount of information you demand from them. Some companies only want the credit card number and expiration date, which opens the door to fraud. Ask for other information to increase security.
- CVV: The customer verification value (CVV) is the three- or four-digit number on the front or back of the card. Some merchants call it the CVV2 code.
- Address: Use address verification to improve security. If the billing and shipping addresses don’t match, your system can flag the transaction and put a hold on it. Additionally, if the billing ZIP code doesn’t match the one on the account, the purchase won’t go through.
- Name: Some people use their middle names on their accounts, while others only use their first and last names. Ask specifically for the name on the card.
The more information you collect, the safer you become. Asking for more information can also increase customer loyalty because your customers know that you’re trying to protect them.
Recognize Your Risk Status
Some companies are considered higher risk than others when it comes to merchant accounts. If you’re using high-risk credit card processing, know that you’re an attractive target for thieves. Some of the most common high-risk industries include telecommunications companies, firearms dealers, e-cigarette retailers, and event ticket brokers.
Protect yourself by applying more stringent guidelines to card-not-present transactions. Educate your employees about fraud, flag suspicious transactions, and communicate with your customers. Otherwise, you might have to fight an onslaught of charge backs and consumer complaints.
No retailer wants to face credit card fraud, but it happens every day. Use the above tips to protect your retail business as well as your customers.