When some one’s credit information gets stolen, the victim isn’t just the person who lost control over his or her identity. Business owners are also being hit hard by identity thieves who use fake credit cards to shop. In a recent study, research firm Javelin Strategy & Research estimated that credit card fraud has already caused over $6 billion in total losses.
Despite the bleak picture, there is a silver lining. The same report from Javelin has found that fraud detection tools are getting better and better. The study concluded that issuers met 61% of the detection criteria in 2012, showing a 12% rise compared to the 2011 figures.
It’s always said that prevention is better than cure, so detecting and putting a stop to fraud at the earliest possible time is of paramount importance. This applies not only to consumers but to business owners as well. Here are a few handy tips to help you spot credit card fraud before it messes up your next credit check.
Examine the credit card closely. Look for suspicious things like missing holograms and non-embossed card numbers. These are signs of a fake credit or debit cards. Here are a few tips on how to spot a fake card:
- Discover cards always have embossed numbers that begin with “6”. These numbers, which are found on the front, partly cover a rectangular hologram found on the right side of the card. Discover cards have a UV logo that shows the word “Discover” when placed under a UV light.
- In an American Express card, the embossed numbers always start with “3”. They cover the portrait in the center. AmEx cards have a UV logo on the front that reads “AM EX”.
- The number on a Visa card always starts with “4”. Like Discover cards, this number partly covers a hologram on the right side of the card’s front. There is also a number printed below that is the same as the first four digits of the embossed number. The hologram itself is of a dove that moves when you move the card. Visa cards have a UV logo featuring a flying “V” in the lower left part of the front and a dove in the center of the card.
- A MasterCard credit card shares similarities with both Visa and Discover cards. The embossed number on the front partly covers a hologram on the right side of the card. The number should always start with a “5”. MasterCard cards have a UV logo on the front that reads “MC”.
Ask for ID and make sure that the name on the credit card matches the name of the ID holder. Some merchant agreements don’t let you ask for ID, however. In these cases, you can ask for the ZIP code on the card owner’s billing address instead. Please note that this latter method is not allowed in California. If the buyer can’t give you any ID or the one they have doesn’t match the name on the card, you can just ask for another mode of payment. Furthermore, always make it a point to verify that the signature on the back of the card matches the one made by the customer on the sales slip.
Invest in an imprinter. These old devices may be less high-tech than current point-of-sale machines, but the imprint that they take can prove to be very useful. It lets you keep a second copy of the card that lets your employees properly match the card’s digits. They also work great when your other point-of-sale machines suffer a glitch or break down.
It’s a different ballgame if you accept orders online or over the phone, although standard checks like verifying the buyer’s ID and address are still recommended. Here are a couple of additional tips to nip business credit fraud in the bud when you transact without the actual credit card present.
Multiple orders made with different credit cards but all carrying the same shipping address is a red flag. This may be one type of scam called a “reshipping scam”. Scammers buy goods using fake credit cards and then use a third person to reship or smuggle them somewhere else.
On a related note, examine the shipping address closely. International addresses or strange delivery locations, in particular, are worth checking out further. You can also make it a point to ship only to the billing address associated with the credit card being used. This prevents identity thieves from using stolen credit information to order an item and then have it shipped to a different address. In addition, always make sure to get a signature when the order is finally delivered. This way you have proof that the order was indeed received in case the buyer claims he or she did not receive it.
Unfortunately, fraudulent customers aren’t the only thing you have to watch out for if you are a businessman. Fraudulent employees can wreak havoc on your business’ credit report too, so it’s also a good idea to subscribe to credit monitoring. Business credit reporting agencies like Equifax Small Business Enterprise or Experian SmartBusinessReportsTM offer services that not only let you catch potentially fraudulent transactions made on your business credit card but also let you check for inaccuracies and errors. It can even let you know of any inquiries made about your business.
If you found this article useful, don’t hesitate to share it with your friends and family. Feel free to throw your own helpful tips in the comment section as well.
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