Protect Your Business From Credit Card Fraud

As a business owner, you don’t enjoy the same protections against credit card fraud that federal law extends to consumers. If you lose money due to someone making a purchase with a stolen credit card, you have only a 60 percent chance of recouping your loss. In 2014, credit card fraud cost U.S. business owners over $32 billion. Here’s a quick review of basic measures you can take to protect your business from credit card fraud.

What Red Flags Should I Look For?

Credit card fraud can take place online or in-person, and certain warning signals are often noticeable in each situation. Online orders with a shipping address different from the billing address are sometimes an indication of credit card theft, as are orders giving a billing address that doesn’t match the one on the credit card account. Large orders from new customers requesting expedited delivery also deserve extra scrutiny, since the thief may be hoping to receive the goods before fraud is detected. Suspicious in-person transactions include customers who have “forgotten” to bring any photo ID, or those who simply seem to be behaving peculiarly.

What Can I Do to Prevent Credit Card Fraud?

A good first step to preventing losses due to credit card fraud is to make sure you collect complete information from every card user. This information should include their full name, mailing address, phone number and three-digit card code. You should routinely call the cardholder anytime a shipping address is different than the billing address. Using an address verification service (AVS) enables you to quickly ensure that the customer’s billing address matches the one on file, while card code verification (CCV) provides another security layer. Your e-commerce software can be set to block purchases from IP addresses in countries you don’t ship to, and to decline orders if it takes a purchaser more than five attempts to enter their card number into your system.

What Should I Do If My Business Is Affected by Credit Card Fraud?

It’s important that you take immediate steps to minimize losses if you suspect fraud. If possible, cancel delivery of the purchased items. Your next action is to notify your merchant services account provider and ask their representative to guide you in providing information to the credit card authorization center. You will also need to contact the bank that is connected to your merchant account. If you encounter an attempt at in-person fraud, you can politely decline to accept the card.

Undertaking some risk is part of doing business, but if you’re alert to signs of fraud you’ll be able to protect yourself from many expensive losses.