Reducing Fraud: Card Present Fraud Prevention

Traditionally, counterfeit fraud attempts increase after large data compromises, such as the recent Target breach. According to Visa, the key areas to focus on to mitigate this risk are: proper card acceptance procedures, identification of valid and suspicious cards, verification of cardholder identity and identifying suspicious behavior. This simply means that as a merchant, it is your responsibility to follow the guidelines for accepting credit cards as the card brands have outlined, be informed about what valid cards look like so that you can spot a counterfeit, validate that the cardholder is the individual attempting to use the card and be on the lookout for suspicious behavior.

So…what are these elusive “card acceptance procedures”?

The card brands suggest that all employees be trained on their proper card acceptance procedures as an essential element to eliminating your loss. Visa even goes as far as to state that,”a card-present merchant that follows proper card acceptance procedures at the point of sale will not be liable for fraud losses should they occur.” So what are these elusive “proper card acceptance procedures”? They are actually fairly simple to implement and execute:

#1: Swipe the card through a magnetic card reader terminal to request the transaction authorization. If the magnetic strip is damaged or un-readable it may be a sign of counterfeit.

#2. While the transaction is processing, check the card’s features and security elements.

#3. Once authorization is obtained, if required, get the cardholder signature on the transaction receipt.

#4. Compare the name, number and signature on the card to those on the transaction receipt.

If you encountered a counterfeit card, would you know?

What the card brands expect of you, as a merchant, is to make sure the card is valid and has not been altered in any way.

Sounds like a tall order huh? You’re right, it can be. You can do this by verifying if the security features on the card are valid. Did you know that each card brand has implemented security features into their cards in an attempt to help you, the merchant, clearly identify the legitimacy of a card? In reality, most individuals are not aware of each of these features and may accept a counterfeit card without realizing they are doing so. Familiarizing yourself with these features can be beneficial in mitigating your exposure to counterfeit transactions. 

Typically, the final step in a transaction between merchant and consumer is obtaining the customer’s signature. Once signed, compare that signature to the signature on the back of the card. Look for inconsistencies in spelling and/or handwriting. At this step, you should also compare the last four of the account number on the card to those displayed on the printed receipt.

Some card holders opt to not sign the back of their credit cards, or they choose to write “See ID” on the back as a deterrent against fraud. In reality, criminals are unlikely to take the time to practice signatures as they tend to use stolen cards as quickly as possible. They are generally counting on you not looking at the back of the card. When you encounter an unsigned card, the following measures should be taken, as an unsigned card is considered invalid and should not be accepted:

  • Check the cardholder’s ID. Asking for official ID can help mitigate fraud, however this cannot be used as a condition of honoring the card.
  • Ask the customer to sign the card.
  • Compare the signature on the card to the signature on the ID.

Not all transactions will require a signature and in the case of Visa Pin-based transactions, the merchant is directed to not request a signature from the cardholder. This is because the legitimacy of the card is being authenticated by the account holder entering their unique Personal Identification Number. 

Be on the Lookout for Suspicious Behavior

Be alert for customer behavior that seems out of the ordinary. Below are some of the types of behaviors to be mindful of:

  • Purchasing high value or large amounts of merchandise without concern for size, style, color, or price.
  • Refusing free delivery on large items.
  • Trying to distract sales associates.
  • Making purchases, leaving the store and then returning to make more purchases.
  • Making purchases either right when the store opens or just before it closes.

Just remember, not all peculiar behavior is indicative of criminal activity. Use common sense and proceed with caution when evaluating suspicious activity.

It is counterfeit!

So what do you do if you believe you are dealing with counterfeit? According to Global Payments, if a merchant ever has doubts about something – a fraudulent card, a signature, or even a customer’s behavior – call in a Code 10. 

If a merchant feels a transaction is suspicious they are advised to call the Voice Authorization Center (this number can typically be found on the sticker on your terminal) and inform the operator of a Code 10. They will ask you a series of “yes” or “no” questions, answer all of the questions calmly and in a normal tone. If the operator requests that you retain the card, only do so if it can be done safely.

A Code 10 is a viable option at any time a merchant feels a transaction may not be legitimate, even if the transaction is approved or if the customer has already left the premises. For more information about Code 10, click here.

Spotting and eliminating counterfeit fraud can assist your organization with mitigating potential losses. Familiarizing yourself with the proper steps for processing transactions, the security elements of each card brand, properly identifying the cardholder and being cognoscente to suspicious behavior can assist you with minimizing losses. Remember, each situation is different and unique; it will be important to use common sense and to always proceed with caution.

If you would like more information or to read Visa’s full article to Reducing Counterfeit Fraud Through Acceptance Best Practices, click here.