By Martha Pierson
Special to the Financial Independence Hub
We all want to do our best to provide our customers with the utmost convenience. Isn’t this the whole point of eCommerce, POS financing, and other recent developments in sales?
Unfortunately, with these conveniences also come increased risk. In fact, this article is going to discuss one of the dangers brought about by technology and its added convenience. That is credit card fraud.
Recent statistics point out that 47% of Americans experienced some form of financial identity theft in 2020. More importantly, credit card fraud, especially those related to new accounts, was reported as the second-worst reported following scams related to government benefits.
It is, indeed, very troubling. Fortunately, there are ways to prevent and minimize such malicious attacks. Here are six tips that both business owners and lenders (such as POS finance providers) can put into action:
Tip #1: Invest in Technology
There are numerous technologies that can help minimize credit card fraud. We simply need to take advantage of them.
For instance, declining cards without an EMV chip is a good first step. Not only does EMV provide another level of encryption, but chipped cards also generate unique codes after every transaction. These features make it impossibly difficult for thieves to create counterfeits.
You can also invest in incorporating a fraud prevention system into your eCommerce website. These platforms are easy to integrate and provide real-time protection for every transaction. Most of these programs can help you screen and authenticate customers, prevent fraud, and even identify vulnerable accounts.
You might also want to look into any advanced payment security feature that your eCommerce platform offers as an add-on.
Tip #2: Beware of Red Flags
Speaking of identifying vulnerable accounts, the next best step to prevent credit card fraud is to simply be aware of the red flags. For example, a person reaching for a credit card from his pocket rather than from his wallet is certainly suspicious. The same can be said for an online customer with multiple failed attempts to purchase due to incorrect information.
Of course, we’re not saying that these red flags automatically point out that one is committing fraud for sure. For all we know, that online customer simply had his caps lock on the whole time. Or maybe the previous customer just shoved his credit card into his pocket for no particular reason.
In the end, the skill to discern fraud can simply be achieved over time through the practice of vigilance and experience.
Tip #3: Increase the Quality of Employee Training
So you now have an idea on how to catch credit card fraud. The question is, are your employees equally equipped as well? Unless you manage every aspect of your business on your own, it is imperative for any business owner to make credit card fraud a part of their training.
We also recommend developing a clear procedure that your employees can follow. Here’s an example for in-person transactions.
- Check the customer’s ID for every credit card transaction.
- Make sure that the credit card doesn’t look tampered with in any way.
- Use an Address Verification Service to confirm the cardholder’s billing address.
- Finally, compare the receipt with the actual card. Check for any errors and inaccuracies.
Tip#4: Upgrade to Mobile Payment
Some experts believe that the best way to minimize credit card fraud is to eliminate the use of actual cards altogether. The cards themselves can easily be stolen and counterfeited. Mobile wallets (like Google Pay and Apple Pay), on the other hand, have proven to be a lot safer, especially with a fraud prevention system in place.
Tip #5: Report Any Incident of Fraud Immediately
There are certainly other ways to further minimize credit card fraud aside from the ones I have listed above. Unfortunately, even the best preventive measures cannot stop a persevering thief. Thus, we highly recommend reporting credit card fraud as it happens to minimize your losses. Here are just some of the things you can do:
- Report the incident to the card issuer’s authorization center, stating that you have a “code 10 authorization request.” It is a special code that merchants can use to verify a card’s validity over the phone while alerting the card issuer of potentially fraudulent activity at the same time.
- Don’t alert the suspect that you’re on to him. Remain calm and proceed with the transaction accordingly. This is especially critical when you’re dealing with an in-person transaction. After all, there’s no knowing how the suspect would react. You, your employees’, and your customers’ safety take precedence.
- Inform the necessary authorities. This can include the local law enforcement unit, your bank, and your legal counsel. Again, you don’t have to do this as the crime unfolds. Don’t draw attention to yourself nor do anything that might put your life at risk. Just make sure to file your reports at the first moment of safety.
Tip #6: Never Stop Learning
Finally, credit card fraud and other forms of financial identity theft are always evolving. Thus, it is your duty as a business owner to constantly educate yourself to remain updated on both the latest fraudulent methods and their best preventive measures.
It seems like such a simple thing to do, but staying informed is actually one of the best ways to prevent credit card fraud and ensure your business success.
The good news is, that’s what you’re already accomplishing right now as we finish this article. By keeping the tips we have shared with you in mind, we are confident that you will be better prepared to handle fraudulent activities in the future, whatever they are. Good luck!
Martha Pierson provides financial and business management analysis for retailers and service providers.