Best Practices for Preventing Credit Card Fraud in Your Business

Introduction

Both in-person and online businesses constantly face new forms of credit card fraud. This threat is concerning for owners and merchants. However, it’s essential to fully understand transactional fraud to combat it properly. Below, we offer some best practices for preventing fraud in card-present and card-not-present transactions.

Card-Present Transactions

1. Declined Authorization: If the authorization request is declined, do not attempt to complete the transaction.
2. Avoid Keyed Transactions at Point of Sale: Do not perform transactions by manually entering card information instead of swiping or inserting it.
3. Signature Verification: Ensure the card is signed. If not, ask the customer to sign the card in your presence and verify the signature with a photo ID.
4. Fraudulent Card-Present Transaction: If the cardholder is present and has the account number but not the card, do not accept the transaction.
5. Verify Account Number: Ensure the account number on the terminal matches the account number on the card, whether swiped, inserted, or tapped.
6. Watch for Suspicious Behavior: Be alert to customers making unusual purchases, showing little interest in products, or trying to distract or rush you during the transaction.

Card-Not-Present Transactions

Card-not-present fraud occurs in transactions where the cardholder does not present a physical card to a merchant. It includes internet, telephone, and mail-order transactions.

1. Address Verification Service (AVS): Use AVS to compare the billing address provided by your customer with the address on file with the card issuer before processing a transaction.
2. Verify Security Codes: Ensure the customer provides the correct security code, located on the back or front of the card, depending on the card type.
3. Watch for Suspicious Behavior: Be alert to customers making unusual purchases, shipping to unverifiable international addresses, or using multiple cards from a single IP address.

Conclusion

Preventing credit card fraud is crucial for protecting your business and maintaining customer trust. By following these best practices, you can reduce the risk of fraud in your card-present and card-not-present transactions.