Fraud Protection

Fraud prevention has never been so critical. Although many transactions still take place in a face-to-face environment, an increasing amount of purchases are made online, over the phone, or through the mail—where there is no card present. Today's scam artists are savvy to the security features and processes involved with each of these transaction types. And merchants must take extra precautions to avoid becoming financially responsible for any fraudulent transactions.

Six Warning Signs of Fraud at Point-of-Sale
Card-present transactions are those in which both the card and cardholder are present at the point of sale. This is usually at traditional retail outlets such as department and grocery stores, electronics stores, and specialty shops and boutiques. Service stations and other businesses where customers use unattended payment devices are also defined as card-present merchants. In traditional sales environments, you are required to take all reasonable steps to assure that the card, cardholder, and transaction are legitimate.

Sometimes certain customer behaviour could point to card fraud, but it doesn't necessarily indicate criminal activity. You know your customers, so let your instinct steer you in the right direction. Watch out for customers who:

  1. Purchase a large amount of merchandise without regard to size, style, colour, or price.
  2. Ask no questions on major purchases.
  3. Try to distract or rush you during the sale.
  4. Make purchases and leave the store, but then return to make more purchases.
  5. Make large purchases just after the store's opening, or as the store is closing.
  6. Refuse free delivery for large items.

12 Potential Signs of Card-Not-Present Fraud
Card-not-present (CNP) merchants must take extra precaution against fraud exposure and associated losses. Anonymous scam artists bet on the fact that many Visa fraud prevention features do not apply in this environment.

Keep your eyes open for the following fraud indicators. When more than one is true during a card-not-present transaction, fraud might be involved.

  1. First-time shopper: Criminals are always looking for new victims.
  2. Larger than normal orders: Because stolen cards or account numbers have a limited life span, crooks need to maximise the size of their purchase.
  3. Orders that include several of the same item: Having multiples of the same item increases a criminal's profits
  4. Orders made up of "big-ticket" items: These items have resale value and therefore maximise profit potential.
  5. "Rush" or "overnight shipping: Crooks want these fraudulently obtained items as soon as possible for the quickest possible resale, and aren't concerned about extra delivery charges.
  6. Shipping to an international address: A significant number of fraudulent transactions are shipped to fraudulent cardholders outside of the region where a transaction takes place.
  7. Transactions with similar account numbers: Particularly useful if the account numbers used have been generated using software available to the Internet (e.g. CreditMaster)
  8. Shipping to a single address, but transactions placed on multiple cards: Could involve an account number generated using special software, or even a batch of stolen cards
  9. Multiple transactions on one card over a very short period of time: Could be an attempt to "run a card" until the account is closed.
  10. Multiple transactions on one card or a similar card with a single billing address, but multiple shipping addresses: Could represent organized activity, rather than one individual.
  11. In online transactions, multiple cards used from a single IP (Internet Protocol) address: More than one or two cards could definitely indicate a fraud scheme.
  12. Orders from Internet addresses that make use of free e-mail services: These e-mail services involve no billing relationships, and often neither an audit trail nor verification that a legitimate cardholder has opened the account.