Although you might not think about credit card fraud with your business, if you sell online or by mail, you’re at risk of losing money from fraudulent credit card charges. In fact, Nielsen expects that credit card fraud will lead to over $31 billion in losses by 2020. To make sure you’re not one of those businesses, follow these tips to effectively combat credit card fraud.
Spot Odd Customer Behavior
If you accept credit cards in person, there are some warning signs to watch for that could indicate the customer is trying to commit fraud. These can include:
- Telling you not to swipe or insert their card because it doesn’t work.
- Trying to rush you through checkout, especially near closing time.
- Buying a large number of expensive items.
- Purchasing an unusual assortment of items, such as clothing that’s all in different sizes.
Just remember that a customer who displays some of these things isn’t always guilty of credit card fraud. However, exhibiting multiple signs at once is a good indication that something isn’t right.
Watch for Unusual Activities Online
If your business processes many of its orders online, there are unusual signs you can look for to spot potential credit card fraud. These include:
- Orders for expensive items, such as televisions.
- Orders that have many of the same items if those items do not need to be purchased multiple times (such as televisions).
- Overnight or rush orders.
- Orders shipped to a different address other than the billing address.
- Orders shipped to a single address using multiple cards.
- Missing personal information on the order form.
Since card-not-present transactions make up around 45 percent of all credit card fraud, it’s important to keep an eye out for suspicious activity to protect your business.
Upgrade to a Chip Card Reader
The most common type of fraud at brick-and-mortar stores is counterfeit credit cards. The old credit cards used magnetic strips that gave the same number with every swipe, which made it easy for thieves to steal the number and use it on a fake card. However, the new chip card readers generate a unique code for each transaction. Even if you’re a small business, new business, or your business has a low credit score, companies like High Risk Pay can set you up with an account that includes some of the latest credit card processing equipment.
Use the Address Verification System
The Address Verification System is a tool used by credit card companies and banks to verify the numerical part of a customer’s address with what’s on file. For example, if the customer’s name and address is Ms. Jane Doe, 123 Main Street, Anytown, USA 67890, the system will verify 123 and 67890. If it says there’s a full match, you have less risk processing the payment. However, keep in mind the system isn’t always exact, such as when customers move and haven’t updated their addresses yet.
Protect your business from credit card fraud by following these effective tactics for spotting and combating fraudulent charges.
Featured Image via Flickr by cafecredit
