Experts project credit card fraud losses rising to about $10 billion by 2020. As a business owner, how can you protect your customers from this type of fraud?
You may think that only accepting credit cards offline is the best approach. Yet, this practice doesn’t guarantee fraud prevention. Don’t know how to prevent credit card fraud?
We’ve got you covered. We’ll tell you the basics about business credit card fraud and how to prevent it. Keep reading for your fraud guide to protect your clients and grow your business.
What Is Business Credit Card Fraud?
Credit card fraud is one of the most common identity theft incidents. This type of fraud is when a person takes someone’s credit or debit card to remove funds or make purchases using the account. Online transactions make it easier for fraudsters to commit this crime.
Most of the time, they obtain the credit card information from identity theft schemes or unsecured websites. As a customer, you put yourself at risk when you use mobile phones, devices, public wifis, and other similar methods to complete transactions.
How to Prevent Credit Card Fraud?
Businesses big and small must always look for ways to prevent credit card fraud. You may think your credit card processing provider is the only one who has to worry about this. Your payment processor may implement their own credit card fraud prevention measures such as reconciliation statements, better encryption, check conversions, among others.
You should put your own procedures in place to improve your customer protection. Don’t forget the negative effects on your reputation every time your business falls victim to a fraud scheme
While fraudsters are becoming savvier, taking simple measures can make a world of difference. Don’t know what you can do? Here are some must-know ways to prevent credit card fraud.
1. Keep a Record of the Credit Card Numbers
Most fraudsters try more than one credit card number to complete transactions. Experts recommend you keep a record of all credit card numbers entered to make purchases. At the end of each day, you may review your transaction batch before sending it to your payment processor.
During your review, you should red flag any customer who tries more than one credit card number to complete transactions. If you spot this behavior, you should verify those transactions before submitting them for processing.
2. Develop Your Own Fraud Prevention Procedure and Stick to It
Businesses big and small should develop their own fraud prevention procedure. Creating your procedure is half the game. You must make sure everyone in your organization understands your internal procedures and follow them down to the T.
It’s recommended that you train all your team members on fraud prevention and techniques to spot any suspicious activity. Also, you should update your procedures on a yearly basis due to changes in identity theft schemes and compliance regulations. Providing a fraud prevention refresher to all your team members each year can improve your customer protection and reduce your chargebacks.
3. Set a Limit of Declined Transactions
Setting a limit to the number of declined transactions is one of the basic yet effective ways of prevents credit card fraud. Many fraudsters use software that tries credit card numbers several times in succession. If you set a limit for the number of declined transactions, the system will flag and ban these users.
Besides avoiding fraud, setting a limit will prevent any charges for declined transactions. Yes, some providers may charge you for transactions even if they don’t go through.
Keep in mind that taking this measure may not be enough to stop fraudsters who notice your banning system. Setting a limit of declined transactions shouldn’t substitute your daily transaction log review. Don’t underestimate the importance of screening all your transactions to protect your customers’ information.
4. Follow PCI Compliant Security Standards
If it’s the first time you hear about PCI Compliance, you should get very familiar with these security standards. The PCI Security Standards Council established these requirements to protect customer information. You may think these standards only apply to certain businesses.
Yet, the council designed the requirements for all businesses that process, transmit and store credit card information. The credit card companies enforce these standards to prevent fraud. Following these standards begins with determining the PCI level of compliance you must meet.
The council classifies businesses under Level 1 to 4 depending on the number of transactions processed on an annual basis. Once you learn your PCI compliance level, you must complete the PCI self-assessment questionnaire. Completing this document will help you learn if your company meets the 12 high-level security requirements.
Once you learn where you might be dropping the ball on customer protection, you should make the necessary adjustments. Making your business PCI compliant is one of the best ways of preventing credit card fraud. Also, credit card processors and merchant account providers will know that you take customer protection seriously.
5. Verify Suspicious Transactions
When you identify a suspicious transaction, you shouldn’t contact the customer. You don’t want to alert the fraudster nor make your customer uncomfortable. Instead, you should contact the credit card issuer and ask for a code 10 authorization.
This process will allow you to verify the validity of the transaction preventing credit card fraud without alerting your customer. The credit card issuer will ask you a series of questions to verify the credit card information. After you or your team member answers their questions, the representative will advise on the course of action in the transaction.
The Bottom Line
Every business can fall victim to business credit card fraud. Yet, simple tweaks to your current fraud prevention internal processes can do wonders. Your plan must fit your business and customer needs.
Do you process your transactions on your website? Maybe you use a virtual terminal to enter and process your transactions. Either way, you must prioritize customer protection.
Consider making your business PCI compliant and verifying your transactions on a daily basis. It’s recommended that you keep a record of your transactions and set a limit for declined transactions. We’re confident that if you apply our simple yet effective ways to prevent credit card fraud, you won’t have to worry about fraud losses ever again.
Want to learn more ways to protect your customers? Read our article on how to keep your customers’ credit card information safe.