It would be difficult for any business to succeed today without accepting credit cards. They are the default method of payment for almost anyone, and businesses that still operate on a cash-only basis are a rarity. Unfortunately, for all the convenience that credit cards bring, they can also pose many risks. One risk in particular is credit card skimming
Credit card skimming and other credit card fraud is a huge problem, and if it happens to your customers, you may be held liable for damages. It is difficult to stop scammers from committing fraud, but not impossible. What follows are the best practices for businesses to protect against credit card skimming.
Accept EMV Chip Cards
The United States has a much higher rate of credit card fraud than most other countries. This is largely because we have been so slow to adopt the EMV Chip, which is the global standard for credit card security. In countries that have adopted EMV more quickly, the decline in credit card fraud has been exponential.
Adopting EMV for your business is one of the best things you can do to protect your business against fraud and protect your customers’ data. It will also protect you from liability in the event that your customers’ data is stolen.
Safely Accept Online Payments
Because of its safety, EMV is the gold standard for in-person transactions. It does not help for online transactions, though, and online shopping has become a vital part of the marketplace. Credit transactions online or over the phone account for nearly half of all credit card fraud, so finding a way to safely accept online payments is of the utmost importance.
You and your business must be on high alert to prevent online credit card fraud. Here are the key warning signs to look for:
- Orders including several of the same item
- Orders made up of expensive items that have good resale value
- Rush or overnight orders
- Orders that fail Address Verification Service
- International orders from a country your business does not market in
- Multiple purchases in one day
- Multiple orders with different cards being shipped to the same address
- Multiple failed attempts to purchase prior to a successful transaction
You should always be signed up for services like Address Verification Service, and you should be keeping a close eye on online transactions.
Create A Procedure To Protect Your Business Against Fraud
Your business needs a clear procedure for employees to follow when processing a card transaction. This creates a habit of fighting fraud while also communicating clear expectations to your staff and customers.
Always ask for identification when processing a credit card transaction. If the name on the ID does not match the name on the card, you are permitted to deny the use of the card. Remember, though, that if the customer is unable or unwilling to present an ID, you are required to honor the use of the card. You can report the suspicious use of the card later.
Check all credit cards for obvious signs of tampering or damage. Use Address Verification Service (AVS) to verify the customer’s billing address. If they fail the AVS check, you are allowed to decline the card. Once the transaction is complete, look at the receipt and compare the last name, last four digits of the account number, and signature on the card against those on the receipt.
Report Fraud As It Happens
No matter what precautions you take or how good your procedure is, there is still a chance that you will experience credit card fraud. If that happens or you suspect it has happened, you should act immediately.
Call the authorization center for the card issuer, and tell them you have a code 10 authorization request. Remain calm to avoid alerting the person attempting to commit fraud. Keep the card in your possession, as you will need it to answer questions. Answer the operator’s questions in a normal tone; all of your answers should be a simple yes or no. Do not try to apprehend the customer yourself; if it is necessary, the operator will notify the police while you or your employee are still on the line.
If you discover that a fraudulent transaction has occurred, notify your credit card processor, your bank, the local authorities and your legal counsel. The sooner you notify the appropriate authorities, the better. Not just for the victim of the fraudulent transaction, but for you as well.
Speak To The Technology Insurance Brokers
For more information on how to prevent credit card fraud, or for information on how to protect you and your company from liability in the event of fraud, contact MFE Insurance. One of our brokers would be happy to speak to you about our excellent liability coverage and what options we can provide to help protect your company against credit card skimming.