5 Tips to Help Your Business Identify Payment Fraud

Jan 18

Previous data security breaches that targeted large retailers like Neiman Marcus and Target have caused merchants and consumers alike to be more wary about payment fraud. Credit card companies have automated processes that allow them to spot fraud even before their clients realize that something is wrong.

Unfortunately, payment fraud doesn’t just happen online. Business owners should remember that it can happen in brick-and-mortar stores as well. To avoid this kind of problem, businesses should be able to recognize potential payment fraud.

5 Tips for Identifying Payment Fraud

Suspicious Shopping Behavior

A customer’s behavior while shopping can give a hint as to whether something illegal is happening. Shop personnel should take note of customers who look agitated, nervous, or in a rush to leave. Take into account people who appear to be ringing up purchases in numbers that are greater than what the average customers buy, or those who buy items indiscriminately, regardless of the size or cost.

Other red flags to watch out for are those who seem to take an unusually long time to sign the sales slip or who look at the signature on the back of the credit card before signing.

Unusual Order Amount

It’s practically unheard of to buy 50 items of the same product, especially if they’re expensive. While most consumers won’t do this, cybercriminals would since they’re using stolen cards. Pay attention to multiple orders, particularly if the orders are for electronic devices, clothes, jewelry, and other high-end items.

Billing and IP Address are Not Compatible

An Internet Protocol (IP) address is used to identify devices and to give a general location of the user. So an IP address that’s incompatible with the customer’s billing address requires closer attention. For instance, if the person’s IP address is located in Japan but the credit card is registered to someone in Lexington, Kentucky, the transaction might be fraudulent. Verify details by calling or emailing the card company.

Owning an Abundance of Credit CardsImage result for many credit cards

The typical American consumer only has an average of 2.6 credit cards. Having an abundance of credit cards associated with a lone IP address or account could be an indication of fraud. While it’s possible the account holder just likes having numerous credit cards, it’s still best to take a closer look at the account.

Expedited or Rush Shipping

Some malicious individuals want to give off the impression that they’re in a hurry by demanding rush shipping, regardless of whether the cost of shipping will cost more than the actual value of the purchase. Businesses should be wary of high shipping cost and take additional steps to check the transaction. They should also be extra careful of expedited orders where the billing address is different from the shipping address.

What to do if In-Store Fraud is Suspected

Personnel in brick-and-mortar stores face a conundrum when it comes to probable payment fraud. On one hand, no business wants to antagonize innocent customers but on the other hand, personnel can’t ignore fraud. So what is a business to do?

Major credit card issuers like American Express and Visa have issued guidelines on what staff could do. One very important rule is to never confront or try to apprehend the customer. Doing so would only put the employee and other people in danger.

Employees can also verify the card’s validity by calling the authorization center and ask for a Code 10 authorization.¬† The¬†call involves a series of yes or no questions, so the customers will not know that their purchase is being flagged as a suspicious transaction.

[Featured image via Pixabay]

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