Credit Card Fraud: How To Prevent It To Avoid Paying Chargebacks

It's now not just common but accepted practice for businesses to accept credit and debit cards from their customers. To not do so would severely hinder the ability for a business to grow. However, because of this their are still risks in accepting credit and debit cards but with the right precautions merchants can minimize or even eliminate these risks.

Credit card fraud is a huge problem seen by merchants everywhere. According to the U.S. Department of Justice, credit card fraud accounts for 40% of all financial fraud and up to $5.5 billion worldwide. In addition, 46% of merchants in an online survey stated that fraud is becoming much harder to detect. Typically it takes about 45 days to detect fraud but by that time the damage is already done to a merchant.

Many customers exhibit certain behavioral traits if they are about to commit credit card fraud and can be easily identified. Some of them are:

  • Purchasing several types of the same merchandise especially if it expensive
  • Buying a large quantity of products like clothes without regard for size, color, or price
  • Making a purchase only to come back later and make additional purchases
  • Attempts to distract or rush you during purchase in an effort to throw you off which is typically seen when individuals work in groups
  • Making a purchase at the beginning of the day when the store is opening or at the end of the day when the store is closing

It's not just good to identify the behaviors listed above but better to adopt some practices to minimize and prevent credit card fraud. Some of them are:

  • Do not accept an expired credit card
  • Turn away a card that looks to have been altered in anyway
  • If the card is not have the customer sign and compare it to the signature of their ID
  • Make sure the account number on the terminal matches what is on the card
  • If you receive a message on your terminal that states "call center" then immediately do so and follow their instructions
  • If you have deep suspicions about the card then call the authorization center and ask for a Code 10 authorization which is a universal code notifying the center their may be an issue

Even though accepting cards as a form of payment is a good idea to drive revenue for your business, their are still some inherent risks involved by doing so. However, with the right precautions you can limit the chances of your business becoming a victim to fraud and being forced to pay a chargeback.

at 8:40 PM
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