Fraud Prevention Tips:

Here are some good fraud prevention practices to follow when accepting credit card payments

Swipe cards whenever possible

The magnetic stripe of a credit card contains valuable cardholder information that is used at the point of sale to verify that the card is not counterfeit. When a transaction is manually keyed (rather than swiped through a magnetic-stripe reader), your exposure to fraud and counterfeit cards increases. As your risk increases, so can your merchant interchange discount rate. If the card does not register through the magnetic-stripe reader, you must obtain an imprint of the card, along with the cardholder’s signature and proper authorization.

Avoid merchant fraud

Any merchant depositing third-party (another merchant’s) MasterCard® or Visa® sales drafts is in violation of their merchant contract, as well as Visa and MasterCard rules and regulations, and will be held responsible for all financial losses. Anyone involved in this scheme can lose the privilege of accepting bankcard transactions.

Complete the authorization

Don’t return a credit card to a customer until authorization and signature verification are complete. An approval code on any sale means that the sale amount was available on the card at the time authorization was received.

Do not issue cash advances to yourself or any third party

Inappropriate issuance of cash advances is a direct violation of your bankcard merchant agreement and can lead to possible suspension of card processing privileges.

Handle returns correctly

Any sale or loss with a Visa® or MasterCard® that results in a refund to the cardholder must be completed by issuing a credit to the customer’s account, not cash. You should not process a credit without having completed a previous purchase transaction on the same card account.

Verify cards carefully

Examine each credit card closely to make sure it’s valid. Keep the following tips in mind to help you determine if a credit card is valid:

Visa® and MasterCard® credit cards should bear a hologram on the front of the card.
The card should not be physically altered in any way.
The signature on the card must match the signature on the sales draft.
The card’s embossed characters should be the same size, height, style and alignment. Watch for cards with numbers or letters that look uneven, colors that are off hue, corners that are unusually rough or square, or logos and graphics that appear fuzzy and uneven. Verify that the embossing is clear and straight.
Check the “valid from” and “good through” dates. Never accept a card being used before or after these dates.

Be aware of card-specific characteristics

The following card characteristics are specific to Visa®:

The dove hologram should appear to fly when you tilt it back and forth.
The special flying V on the front of the card should be shown as “CV,” “PV” or “BV.”
The signature panel should bear the repeated word “Visa” in blue at a 45-degree angle.
The four printed numbers above the embossing should match the first four embossed numbers.

The following card characteristics are specific to MasterCard®:

A hologram of two interlocking globes must appear on the front of all MasterCard cards and must appear to move when you tilt it back and forth.
The signature panel is printed with a repetitive, multi-colored diagonal background pattern of the word “MasterCard.”
A 16-digit MasterCard account number (matching the one embossed on the front of the card) followed by a three-digit indent-printed code will be indent-printed in reverse italics on the signature panel.
A unique security character “MC” should appear next to the expiration date.

Compare signatures

Always compare the signature on the sales draft with the signature on the card. If the card is not signed, in addition to requesting an authorization you must:

Ask the cardholder for a form of current government identification, such as a passport or driver’s license. Write the serial number and expiration date of the identification on the sales draft.
Compare the signature on the ID with the signature on the card and the transaction slip. (It’s your responsibility to verify with your own legal counsel that this provision does not violate local or state laws.)

Watch for suspicious behavior

It’s important to be aware of possible counterfeit, stolen or fraudulently used credit cards. Not only will you protect yourself by being aware of any suspicious activities or transactions, but you may also earn rewards for returning flagged cards. The following are potential warning signs of suspicious behavior:

Makes random purchases without regard to size, style, color or price
Attempts to distract you with unnecessary talking or delays a selection repeatedly or hurries you at quitting time.
Purchases an extended warranty without hesitation, even though it may be costly.
Makes purchases, leaves the store and returns to make additional purchases.
Pulls the credit card out of a pocket rather than a wallet or purse. Doesn’t have a driver’s license or other legal identification.

How to handle a suspicious transaction

One of the most widespread credit card fraud schemes involves magnetic-stripe counterfeiting. This scam involves re-encoding a valid account number onto an existing magnetic stripe. Your electronic terminal is programmed with a fraud protection feature (at no charge to you) to help you detect these fraudulent cards.

After swiping a card through the magnetic-stripe reader on your terminal, you will be prompted to key in the last four digits on the front of the card. If the magnetic stripe does not match the numbers you key in, the terminal will display “Last 4 Digits Do Not Match/Mismatched Digits” and will halt the transaction. To ensure that you didn’t enter the wrong number, try to run the transaction once more. If your terminal displays the same warning, call the Automated Voice Authorization Center and tell the operator that you have a “Code 10” authorization.
A request for a “Code 10” authorization tells the operator that a suspicious transaction is taking place. If you can’t speak freely, the operator will read a list of possible problems with the card so you can answer yes or no and avoid alerting the customer. You should attempt to stay on the line and keep the card until the authorization is complete. If the authorization is denied, follow the instructions the operator gives you.
If the card is fraudulent, do not attempt to apprehend the card user. If the operator instructs you to retain the card, attempt to do so peacefully. Follow any specific instructions the operator gives, unless they put you at risk.

Securing Information

Individuals who attempt credit card fraud may pose as a representative of MasterCard®, Visa® or a government institution with the intent of gathering credit card numbers. At no time should you provide credit card number information to anyone if you have any doubts about his or her position. Instead, obtain his or her name, company and contact phone number and immediately contact your account manager or call the customer service number found on your most recent statement.

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