Beware of credit card fraud
As society becomes increasingly cashless, small to medium-sized enterprises (SMEs) are urged to become more vigilant in minimising their exposure to credit card fraud.
You need to have secure practices in place for handling credit card purchases, and must also ensure your team members follow the necessary procedures to the last detail. The counterfeiting of credit cards and the theft of identities for use over the Internet are among the newer practices in credit card fraud, according to Arthur Steele, expert on credit card fraud.
Steele says the methods employed by criminals are constantly changing in order to meet the challenges presented by tightened security and changes in technology. He strongly urges businesses to be vigilant at all times.
According to figures from financial institutions, credit card use has risen by almost 400 percent over the past five years. Accepting credit card payments is thus part of the every day risk of running a business. However, when a fraud is perpetrated it is the business that has sold the goods or services that will be slugged with the charge-backs if there has been a failure to comply with the credit card company’s requirements.
Retail consultant, Stan Moore, says the best way to prevent credit card fraud is to have a sound system in place and to know what is required by the card provider. Education provides the key to minimising the risk of falling victim to credit card fraud.
“It is the best way to protect a business from fraudulent activity … crooks always prey on ignorance,” said Moore, adding that team training in loss prevention should be part of any sound business management practice. All too often credit card payments are accepted without even a signature check.
He advises small business owners to not only provide the necessary training in correct procedures but also to be cautious about whom they employ. “A lot of casual labour is employed and business owners need to be wary of who they are employing,” he said. Once good people are in place, they then need to be trained in the correct procedures in dealing with credit card transactions.
Moore says selling goods and services over the Internet is “fairly dangerous”. “People can make whatever claims they like and hack into an account number generating system. Many of these are rejected but some do get through,” he said.
Another fraudulent practice is “skimming”, whereby credit card details can be downloaded and encoded onto another card. In a face-to-face situation when a credit card transaction is processed electronically and approved, it merely shows there is money in the account. It does not verify that the transaction is from the actual holder of the card.
At the point of purchase, signatures must be matched and, if in doubt, team members should know how to politely ask for some other form of identification. Telephone orders or purchases via the Internet are perhaps a greater risk and require additional enquiries to support the information provided. Checking the telephone number against the name listed in the telephone book is a good starting point. Also, the holder of the card should be available to sign upon delivery.
Here are some tips on preventing credit card fraud in your business:
· Never send goods ordered over the telephone, by mail or through the Internet to a post office box address, nor have them collected by a courier organised by the purchaser. Only send goods to a home or business address and have them delivered to a person inside the premises.
· With orders taken over the telephone, Internet or by mail, check the telephone number against the name in the telephone book. Then wait for a short period and call the contact number provided and ask for the caller. Confirm order details and record the date and time you spoke with the person.
· In a face-to-face transaction, always cross check the signature and do not return the card to the purchaser before the sale is processed and signature confirmed.
· Be wary of customers who try to rush a sale, look nervous or agitated, or sign a card slowly and unnaturally.
· Check the card itself. If any alterations or irregularities appear on a card ask for additional photo identification or hold the card and call for authorisation.
· Ensure card receipts and carbon copies are destroyed.
· Retain transaction and/or terminal receipts for six months. If you cannot provide these to your bank upon request, a transaction may be charged back to you.
With new team members, look for changes in behaviour and other signs, such as gambling. Separate employees’ duties and implement job rotation where possible.
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