Are You Training Your Employees to Spot Credit Card Fraud?

Fraud + Chargebacks Fraud Prevention By American Express April 10, 2015

Overall fraud cost US businesses $32 billion in 2014, according to LexisNexis, representing a 38% increase over 2013. Fighting fraud can be a daunting task, but as a small merchant you have an important weapon: your own employees. Train them to spot suspicious activity when conducting transactions, whether card present or card not present, and have a procedure in place when you suspect a transaction is fraudulent.

Whether your customers make most of their purchases on your website or in your store, keep these questions in mind as they may point to a suspicious or fraudulent transaction.

Recognizing Fraud – In-store Purchases:

  • Does the customer seem nervous, edgy or impatient?
  • Does the customer not keep the card in a wallet or purse? Fraudulent shoppers may keep the credit card in their hand, or in a pocket, separate from their ID.
  • Notice what items are being purchased. Is the customer buying an unusually large number of expensive items?
  • Is the customer trying to distract you, or speed up the transaction? This could be an intimidation tactic to fluster your staff and ensure the sale gets approved quickly.
  • Does the magnetic strip on the card not work, or did the customer tell you not to swipe the card because it is damaged?
  • Is the customer trying to make numerous purchases in a short amount of time?
  • Are any of the above transactions taking place during an extremely busy shopping period for you, i.e. during the holidays, when perhaps your staff is stretched and may be less likely to ask for or closely examine ID’s and credit cards?

Recognizing Fraud – Online Purchases:

  • Is the order amount much higher than your average order?
  • Is the customer claiming he or she didn’t receive part or all of the order, though your records indicate the shipping weight was correct, or you have video of the packing process to ensure that what was purchased was actually shipped?
  • Is the customer purchasing multiple expensive items that don’t seem to go together?
  • Does the IP address make sense? For example, is the item being ordered internationally, but shipping to a domestic address?
  • Do the billing and shipping addresses differ?
  • Does the email address seem strange, or not match the customer’s name?

What To Do When You or Your Employees Suspect Fraud:

Particularly for online purchases, you can always reach out to the customer to confirm: send an email, or contact them at their billing (as opposed to shipping) address.

If you think the transaction is a fraudulent one, you can call your processor and say “I have a Code 10 Authorization request.” You’ll be asked for your Merchant ID number or other unique identifier. The operator will then ask you “yes” or “no” questions to determine if it is indeed a fraudulent transaction, and then will guide you on the necessary next steps.

But that’s not the only reason to make a Code 10 authorization request. You should call your authorization center if any of the following situations occur:

  • After the card is swiped, the point-of-sale (POS) terminal displays a “Lost or Stolen Card,” “Pick Up Card” or a similar message.
  • Upon inspection of the card, you notice its security features have been altered or tampered with.
  • The signature on the transaction receipt does not match the one on the back of the card.

With these tips, you can help train and empower your employees to fight counterfeit fraud –saving you time, money, and inventory.