With the new year upon us, Merchant Warehouse is committed to helping small business owners with some tips on avoiding fraudulent credit card transactions in 2012 and beyond. Fighting fraud is all of our responsibility and a little diligence on your part could save your business hundreds or thousands of dollars.
First, a few quick facts and some advice on how to limit your exposure and risk:
- The U.S. currently accounts for 47% of global credit and debit card fraud even though it generates only 27% of the total volume of purchases
- Payment card fraud losses totaled $3.56 billion last year in the U.S. (http://www.marketwatch.com/story/us-leads-the-world-in-credit-card-fraud-states-the-nilson-report-2011-11-21)
If you take cards in-person, make sure your staff is inspecting every card they get for payment. It should have a clear signature and raised card numbers. Don’t be shy about asking for a picture ID. If your payment systems have AVS(Address Verification System) capabilities, be sure to use them.
If you believe a card is stolen, fraudulent or otherwise suspicious, you should train your staff on how to make a Code 10 authorization request.
The Code 10 authorization request alerts the card issuer to the suspicious activity—without alerting the customer. During a Code 10 call, you will speak to the card issuer’s special operator, who will provide instructions on any necessary action. This type of authorization request is the most likely to result in a call to law enforcement.
Code 10 Steps
- Keep the card in hand to quickly respond to questions.
- Call 1-800-228-1122 and say "I have a Code 10 Authorization Request."
- When connected to the special operator, answer all questions calmly and in a normal tone of voice.
- Follow all operator instructions.
If the operator asks you to retain the card, comply with this request only if it is safe to do so.
If you are keying transactions or receiving them off the internet, you are at even more risk for fraud. Below are some red flags to watch out for in these environments.
- Orders that require you to ship product outside of the United States. There are obviously very legitimate orders from overseas but, if your business does not normally receive such orders, or receives any which seem unusual, you should give them extra scrutiny.
- Transactions requiring you to “prepay” the shipping costs via Western Union to a specific shipping company being used at your customer’s request. Any suspicious sounding shipping arrangements are a good sign of potential fraud.
- Unusually large orders or those containing multiple quantities of the same item. You know your business better than anyone. If a large order seems particularly unusual in any way, trust your instincts and follow-up on it. Thieves know a stolen card number won’t last long so they typically place large orders while they can. They are also always looking to maximize their resale value.
- Orders from generic e-mail addresses (ie. firstname.lastname@example.org) or calls using TDD (telecommunications device for deaf) to place orders. Many of these orders are legitimate, but they are sometimes indications of a fraudster looking to remain anonymous.
- “Rush” or “overnight” shipping requests. Crooks want your goods as soon as possible for the quickest possible resale. The last thing they care about is extra delivery charges.
- Transactions with similar account numbers, multiple orders from one account or multiple orders to one address from multiple cards. These are all highly suspicious and are worth your attention.
Merchant Warehouse Customers
In addition to the advice above if you are a Merchant Warehouse customer and have a question/concern or are unsure about an order or transaction, please don’t be shy about calling/emailing one of our Risk Representatives here at Merchant Warehouse. We can help you determine if the transaction is legitimate and give you guidance on steps you can take if you are suspicious.