How to prevent card fraud in your business
11 October 2011
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Whilst the total amount lost to fraud on UK credit and debit cards fell by 9% to £170 million in the first half of 2011, there is still much to do to stop people who are determined to take money from your business by using someone else's card.
Fraudsters are much less likely to target your business in person via a ‘Chip and PIN' transaction, and the majority of fraud is seen where the cardholder is not present, i.e. mail order and online payments.
 
Potential fraudulent transactions can be reduced by utilising the new security protocols recently introduced by the card-issuing banks, MasterCard and Visa, the main ones being:
 

Mail order transactions

Look out for the following potentially suspicious signs:
  • Is the sale too easy? Is the customer disinterested in the price or details of the goods? Are they a new customer?
  • Are the goods high-value or easily resalable?
  • Is the sale excessively high in comparison with your usual orders?
  • Is the customer ordering many different items?
  • Do they seem unlike your usual customer?
  • Is the customer providing details of someone else's card, e.g. that of a client or family member?
  • Is the customer reluctant to give a landline phone number? Are they only prepared to give you a mobile number?
Use Address Verification Service (AVS) and Cardholder Verification Value 2 (CVV2) checks on your terminal. Ensure that ALL the information that is requested is entered and verified, as any missing data will probably mean your bank will charge you more for this transaction and also reduce the level of security for your business.
 

Internet retailers

  • Make sure your shopping cart/checkout is secure and meets Payment Card Industry Data Security Standards (PCI DSS) requirements
  • Ensure you or your payment software supplier have up-to-date anti-virus and anti-phishing software installed on your computer systems.
Adoption of fraud prevention tools such as Verified by Visa and MasterCard SecureCode on your Payment Gateway can help to minimise your online fraud losses. Customers will be prompted for their password and the transaction can then be authorised and approved.
 
REMEMBER – all of the above measures will help you in determining whether you think the cardholder is genuine, however authorisation of the card is NOT a guarantee of payment whenever the cardholder is not present, and the author would always recommend you do not proceed with the transaction and deliver the goods if you are in ANY doubt whatsoever.  At the end of the day, they are your goods and it is your money potentially at risk.
 
About the author
As an independent consultancy and partner of the Forum of Private Business, Accept Cards Ltd advise on all areas of accepting card payments and can arrange a merchant account at a significantly lower cost for members.
 
If you have any concerns or wish to learn more about how to prevent card fraud, call the Forum of Private Business on 0845 130 1722 to find out how Accept Cards can help.


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