Credit Card Fraud – Preventative Steps for Protecting Your Business Fraud prevention is a critical issue for any business that accepts credit cards. The widespread proliferation of point-of-sale processing terminals has tremendously helped the fight against fraud by obtaining immediate authorizations. Even so, your first line of defense is still your people. A terminal cannot observe a customer's behavior and check security features on the card. As a processing merchant, you must take additional steps to reduce fraud losses.

The Basics An important starting point for a solid defense is to know the rules – make sure key staff members are familiar with the Visa® and MasterCard® Rules and Regulations provided by your processor. This will help avoid misunderstandings and set the stage for successful fraud and chargeback prevention efforts. Make sure you and your staff understand the basics about credit card fraud, including warning signs and common ploys. Do a little research and network with others in your industry to stay abreast of important developments. Never allow another business to use your credit card terminal for their transactions. In addition to being a violation of MasterCard and Visa regulations, this exposes your processing account to potential fraud.

Visa recommends taking four simple steps in each face-to-face transaction to help reduce fraud.

1. Hold on to the card for the entire transaction; you will need it to complete some simple security measures. Do not automatically return the card to the customer after you swipe it.

2. Review all of the card's security features. Match the account numbers on front and back, carefully look at the card's embossing, check the hologram, and flip the card over to inspect the signature panel. If the card is not signed, ask the customer to sign the card and request to see a valid government identification, such as a driver's license, for comparison.

3. Obtain authorization through the point-of-sale terminal.

4. Compare signatures from the back of the card to the signed sales draft.

You should train your staff to trust their instincts in potentially fraudulent situations. Be wary of suspicious behavior, such as someone who signs the receipt awkwardly or tries to rush a large purchase through at the end of the day. Criminals know that businesses are most susceptible to fraud when they are distracted, and rushing to close up for the day while you handle last minute customers can be a tempting scenario.

Reporting Potential Fraud So what should you do if something does not feel right? If you are suspicious of a card or customer, Visa recommends carefully following these procedures:

1. If possible, immediately and confidentially inform your manager of the situation without letting go of the card.

2. Call the authorization center and, in a normal tone of voice, ask for a "Code 10 authorization". By doing so, you put the center on alert without letting the customer know you are suspicious.

3. If you are able to speak freely, tell the operator what you are suspicious about. Otherwise, the operator will ask you a series of "yes" or "no" questions about the transaction, so be sure to have the card and sales draft in your hand. You should also have your merchant number handy. The operator will tell you what to do next.

When placing a CODE 10 call, always remember your safety comes first. If you feel you may be in danger, just decline the transaction and return the card to the customer. If you are unable to make a CODE 10 call at the time of the transaction, do so as soon after the transaction as possible. The issuer can investigate and block the account from further use if need be. According to Visa, about 50 percent of Code 10 calls result in approvals. The rest are determined by the authorization center to be fraudulent. This procedure is key to fraud prevention at the point-of-sale.