The Role of Merchant Services in Credit Card Fraud Prevention

Credit card fraud is an umbrella term for theft committed by using a payment card as a fraudulent source of funds to obtain goods without paying. By its very nature, credit card fraud also makes it easy for criminals to steal a cardholder’s identity to perpetrate additional fraud. By working closely with their merchant services provider, businesses that accept credit cards can learn how to prevent credit card fraud.

In 2009, the Federal Trade Commission received almost 1 million complaints of fraud and identity theft from consumers. Coming in at 17 percent of the total, credit card fraud was the most common form of reported identity theft. Not surprisingly, the Unisys Security Index that same year revealed that credit and debit card fraud was the #1 fear of Americans, rating higher than terrorism, computer and health viruses, and personal safety.

Vigilance is the first line of defense against credit card fraud. Here are some simple steps merchants can take to protect themselves and their customers:

• When a customer presents a credit or debit card, ask for a driver’s license or photo ID to confirm their identity. (Note: Examine the identification for legitimacy; someone using a stolen credit card may also have a fake ID in hand.)
• Check for security features on the credit card (i.e. hologram). Does it look and feel legit? Are the embossed account numbers on the front clear? Does the signature line on the back show signs of tampering?
• Compare signatures on the credit/debit card, ID and receipt to confirm that they all match.
• If in doubt, call the issuer to confirm that the card has not been reported lost or stolen. Keep the card in your possession, in case the customer beats a fast retreat.
• All copies of credit card transactions should be destroyed so they can’t be fished out of the trash and used for fraudulent purposes.
• Educate your staff about the importance of fraud prevention. And keep an eye on them, since fraud can be an inside job. For example, employees have been known to use palm-sized cardreaders to “skim” credit card information without the cardholder’s knowledge and then pass it along to accomplices. Account numbers, expiration dates and CVC codes can be used to manufacture counterfeit cards.

Additionally, merchants should work closely with their merchant services provider to follow best practices when it comes to accepting credit cards. This includes achieving and maintaining PCI compliance, which means adhering to secure industry standards for credit card processing.  Compliance is not only mandatory, it makes business sense. Non-compliant businesses are at greater risk for security breaches, stiff penalties and potential loss of reputation and sales.

Reputable merchant services providers like Merchant Express® offer data breach security programs that are designed to help merchants meet expenses that result from a suspected or actual breach of payment card data.

Make credit card fraud prevention a priority for your business to protect yourself and your customers by following the advice offered above and by working closely with your merchant services provider to stay safe.