Fraud Prevention Tips

Below are a few fraud prevention tips. We recommend sharing the information with your staff and anyone who may come in to contact with customer payment information.

Watch out for customers who:

• Purchase a large amount of merchandise without regard to size, style, color, or price.

• Ask no questions on major purchases.

• Try to distract or rush you during the sale.

• Make purchases and leave the store, but then return to make more purchases.

• When their card declines, dials their bank on their personal phone and asks you to speak with their banker.

• Make large purchases just after the store’s opening, or as the store is closing.

• Refuse free delivery for large items.

If you are a card-present merchant, take these steps to ensure the legitimacy of every credit card, cardholder, and transaction.

  • Swipe the card through a magnetic card reader, insert the card into a chip-reading device, or wave the card in front of a contactless payment terminal to request the transaction authorization. 

Note: Many credit cards now have a chip that communicates information to a point-of-sale terminal with a chip-reading device. If a chip-reading device is available, preference must always be given to chip card processing before attempting to swipe the magnetic-stripe. The card should remain in the terminal until the transaction is complete.  

  • While the transaction is being processed, check the card’s unique design features and security elements, if possible. Make sure the card is valid and has not been altered in any way.  
  • Obtain authorization and, if required, get the cardholder signature on the transaction receipt.
  • Compare the name, last four digits of the account number, and signature on the card to those on the transaction receipt.    
  • Adhere to your merchant store procedures and respond accordingly if you suspect fraud.

Fraud might be involved when more than one of these indicators is true during a card-not-present transaction:

• First-time shopper

• Larger-than-normal orders

• Orders that include several varieties of the same item

• Orders made up of “big-ticket” items

• “Rush” or “overnight” shipping

• Shipping outside of the merchant’s country

• Transactions with similar account numbers

• Shipping to a single address, but transactions placed on multiple cards

• Multiple transactions on one card over a very short period of time

• Multiple transactions on one card or a similar card with a single billing address, but multiple shipping addresses

• For online transactions, multiple cards used from a single IP (Internet Protocol) address

• Orders from Internet addresses that make use of free email services

Basic fraud control actions for mail order/telephone order and Internet merchants:

• Obtain an authorization. Avoid using a $1 authorization to verify if the account is in good standing.

• Ask the customer for card expiration date and include it in your authorization request. An invalid or missing expiration date can be an indicator that the person does not have the actual card in hand.

• Obtain the CVV2 three-digit code from the cardholder. An issuer-validated CVV2 code is a good indicator that the card is genuine.

• Where available, verify the cardholder’s billing address via the Address Verification Service (AVS). This helps to validate the cardholder’s billing address directly with the issuer.

• Submit the authorization request with the cardholder’s billing address and necessary CVV2 code information. The card issuing bank will return CVV2 and AVS result codes with the authorization.

• Perform internal screening or use a third-party tool to screen for questionable transaction data or other potential warning signs indicating “out of pattern” orders. Review transactions with higher risk characteristics before capture.

If you are uncomfortable or suspicious with a sale, contact the card issuing bank. The bank will be able to do a cardholder name, billing address, and phone number verification and possibly contact their cardholder to confirm the sale. The following card assistance phone numbers will provide you with the card issuing banks phone number.

Visa: 1-800-847-2911

MasterCard: 1-800-622-7747

American Express: 1-800-528-5200

Discover: 1-800-347-3083