Fraud Prevention


Fraud is a real problem in any business. While it is an extra risk for businesses that process credit card transactions by phone/mail or Internet, retail merchants should always be alert for potential fraud transactions as well. Retail merchants should keep their eyes open for certain customer behavior that could point to bankcard fraud and all employees should be familiar with their stores fraud policy and procedures.

Watch out for customers who:

  • Purchase a lot of merchandise and don’t care about size, style, color or price
  • Don’t ask questions about major purchases
  • Try to distract you or rush a sale
  • Return after making a purchase and then make additional purchases
  • Make large purchases right when the store opens or before it closes
  • Refuse free delivery for large items.

When you receive a credit card always verify it carefully. Look closely at the card to make sure it is valid and is not expired. Both Visa & MasterCard have a holographic image on either the front or back that should move when you tilt the card. Also look for any signs that the card has been physically altered. The signature on the card should always match your receipt.

If you see signs that make you suspicious

Follow your company’s procedures and notify your supervisor or storeowner.

Hold onto the customer’s card if you think you can do so safely.

Call your voice authorization center and request a “Code 10” authorization, using a normal tone of voice. An operator will tell you what to do.

***Please remember, these signals do not necessarily indicate criminal activity. You know your customers, so let your instincts be your guide and never risk your own safety or the safety of others in the vicinity.


Take these steps to accept Visa/MasterCard CNP payments. To report suspicious activity, contact your merchant financial institution.

  1. Always ask for the expiration date of the card. An invalid or missing expiration date may indicate that the customer does not have the card in hand.
  2. Verify the cardholder’s billing address. Ask the cardholder for their day and evening telephone numbers, “in case there is a question.” Orders with a “ship to” address that is different from the cardholder’s billing address can be a danger sign.
  3. For Visa cards, ask for the non-embossed number which appears above the first 4 digits. It should match the first 4 digits of the credit card number. Ask the caller to describe the embossed symbol, (CV on Visa Classic, BV on Visa Business and PV on Visa Gold cards) to the right of the expiration date. Also, ask about the repetitive pattern of the Visa word mark throughout the signature panel.
  4. For MasterCard, ask for a non-embossed 3-digit code on the back of the card following the card number. It should match the card validation code (CVC2). Also, ask for a description of the security character—a stylized MC embossed on the line next to the valid dates on the face of the card.
  5. For American Express and Optimal customers, ask for the 4-digit, non-embossed CID number printed on the front of the card (on the right border of all American Express Cards; on the left border of Optima Cards).
  6. For Discover Card customers, ask the name of the bank on the back of the card. It should always be Greenwood Trust Company. If the customer can’t name the bank, chances are the customer is attempting a fraudulent purchase.
  7. Utilize AVS (Address Verificaton Service). AVS immediately and automatically compares the billing address given to you by your customer against the billing address on file with the credit card issuing bank. Visa, MasterCard, American Express and Discover all offer AVS with virtually identical features.
    • Approximately 65% of all unauthorized card use is by people who do not know the billing address of the person whose card they are using.
    • The instance of fraud is much greater when there is no AVS match and when the order is for a high dollar amount; the caller requests overnight delivery to an address that is located in a high fraud area; or the “mail to” address differs from the “billing address.”
    • AVS is most effective when used in conjunction with other fraud detection practices.
  8. Credit Card Authentication- Verifies a cardholder’s account ownership during an online purchase. With Verified by Visa (VbV) or MasterCard Secure Code, consumers are assured that using a bankcard online is as safe as using it at a local merchant.
  9. If you receive an authorization, but still suspect fraud:
    • Ask for additional information during the transaction (e.g., request the financial institution name on the front of the card).
    • Contact the cardholder with any questions.
    • Confirm the order separately by sending a note via the customer’s billing address rather than the “ship to” address.
  10. Be Aware of Internal Fraud- Employee theft is an unfortunate fact of life, One “game” that is unique to direct marketers is the misdirection of refunds to a thief’s credit card. Monitor mismatches between the credit cards used for ordering and any subsequent refunds. Also, watch for employees who may purchase goods and charge them to a customers’ credit cards. Last but not least, take some extra steps to protect yourself:
    • Monitor your employees
    • Safeguard credit card numbers
    • Balance your funds on a daily basis
  11. Stay Vigilant- You can significantly reduce credit card fraud by taking direct steps to counter criminals’ weak points. Often, just your increased vigilance and scrutiny sends a message to thieves that your business is determined to protect itself against their illegal activities. And that can be enough to persuade them to try their scams elsewhere.
  12. Potential signs of CNP fraud- Keep your eyes open for the following fraud indicators. When more than one is true during a card-not-present transaction, fraud might be involved. Follow up, just in case.
    • First-time shopper: Criminals are always looking for new victims.
    • Larger-than-normal orders: Because stolen cards or account numbers have a limited life span, crooks need to maximize the size of their purchase.
    • Orders that include several of the same item: Having multiples of the same item increases a criminal’s profits.
    • Orders made up of “big-ticket” items: These items have maximum resale value and therefore maximum profit potential.
    • “Rush” or “overnight” shipping: Crooks want these fraudulently obtained items as soon as possible for the quickest possible resale, and aren’t concerned about extra delivery charges.
    • Shipping to an international address: A significant number of fraudulent transactions are shipped to fraudulent cardholders outside of the U.S. Visa/MasterCard AVS can’t validate non-U.S., except in Canada and the United Kingdom.
    • Transactions with similar account numbers: Particularly useful if the account numbers used have been generated using software available on the Internet (e.g., Credit Master).
    • Shipping to a single address, but transactions placed on multiple cards: Could involve an account number generated using special software, or even a batch of stolen cards.
    • Multiple transactions on one card over a very short period of time: Could be an attempt to “run a card” until the account is closed.
    • Multiple transactions on one card or a similar card with a single billing address, but multiple shipping addresses: Could represent organized activity, rather than one individual at work.
    • In online transactions, multiple cards used from a single IP (Internet Protocol) address: More than one or two cards could definitely indicate a fraud scheme.

Orders from Internet addresses that make use of free e-mail services: These e-mail services involve no billing relationships, and often neither an audit trail nor verification that a legitimate cardholder has opened the account.

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