Preventing Fraud

Here are some steps to prevent chargebacks (credit card disputes for which your business checking account could be debited) and other fraud-related costs. Become informed and educate your employees about these best practices. Everyone must be involved and proactive to prevent credit card fraud.

You may not be able to prevent credit card fraud entirely, but by establishing and following procedures to check every transaction, you can greatly reduce your losses.

Preventing fraud in face-to-face transactions

• Ask for and examine other identification (besides the credit card), such as a driver�s license or other photo ID. Check to see if the ID has been altered or looks different in any way, since someone using a stolen credit card may also have a stolen or fake ID.


• Carefully view the signature on the credit card. (Never skip this step!) Smeared signatures can indicate a stolen and altered card.
  
  
• Compare signatures. (Never skip this step!) Besides comparing the signature on the credit card with the signature on the card slip, compare it to those on any other ID presented.
  
  
• Check the security features of the credit card:
  
  
  • Review the card�s signature panel. For Visa and MasterCard, the panel should show a repetitive color design of the Visa or MasterCard name. Altered signature panels that are discolored, glued, painted, erased, or covered with white tape most likely indicate credit card fraud.
    
    
  • Check the card�s embossing. �Ghost images� of other numbers behind the embossing are a tipoff that the card has been re-embossed. Watch for signs of tampering with the hologram. (Untouched holograms will show clear, three-dimensional images that appear to move when the card is tilted.)


• Compare the presented card with recent lists of stolen and invalid credit card numbers.
  
  
• Call for authorization of the presented credit card; remember to take both the card and the sales slip draft with you. That way if the customer runs away while you�re making the call, you still have the card. Ask for a �code 10� if you have reason to suspect possible card fraud, such as a counterfeit or stolen card.
  
  
• Destroy all copies of the credit card transaction to ensure that no one can steal the card information. Help prevent future credit card fraud.

Dealing with credit card customers through the Internet, over the phone or by mail calls for different prevention strategies, since you can�t view the card. However, you can be alert to suspicious behaviors and implement policies to prevent credit card fraud for transactions when the card is not present. Here are some steps you can take:

• Don�t process credit card orders unless the information is complete.
  
  
• Don�t process credit card orders that originate from free e-mail addresses or from e-mail forwarding addresses. In those cases, ask the customer for an ISP or domain-based e-mail address that can be traced back.
  
  
• If the shipping address and the billing address on the order are different, call the customer to confirm the order.
  
  
• Be wary of unusually large orders; call the customer to ask questions and confirm the order.
  
  
• Watch out for multiple transactions made with similar card numbers in a sequence; call the customer to ask questions and confirm the order.
  
  
• Always call the customer to confirm the order first if you�re asked to ship it express, rush or overnight. These are the shipping methods of choice for credit card cheaters.
  
  
• Be wary of overseas orders, especially if they show any of the characteristics noted above.