What Should Your Business Do If You're a Credit Card Fraud Victim?

While the introduction of EMV chip credit cards has led to a decrease in card-present credit card fraud in the United States, credit card fraud is still a serious issue affecting many businesses today. According to a 2018 report by LP Magazine:

  • In 2016, worldwide credit card losses exceeded $24 billion.
  • Of global credit card fraud, 47 percent happens in the United States.
  • In the past 5 years, it's estimated that 47 percent of Americans have been victims of credit card fraud.
  • The vast majority of credit card fraud today occurs online or by phone.

Credit card fraud doesn't just impact individuals. It can impact your business, too. In some cases, such as if you don't accept EMV chip card payments, your business can be held liable for credit fraud. And if you've already shipped out a product to a thief, you will have lost money on that merchandise.

Here's what to do if your business credit card fraud detection has identified a breach:

Types of Credit Card Fraud Businesses Experience

Your business may be a victim of in-store credit card fraud or card-not-present credit card fraud. Here's the difference:

  • In-store credit card fraud occurs when a shopper uses a stolen or counterfeit credit card to make a purchase in person. The fraudster hands over a bogus card that you use to complete the transaction, or they swipe or insert the card on your point of sale machine themselves.
  • Card-not-present credit card fraud occurs when a shopper is making a purchase when they're not in your business location. They could be doing this online or over the phone, using a stolen card or card information to complete the purchase.

Each credit card provider (Visa, Mastercard, American Express, Discover) has its own set of guidelines and best practices for spotting fraud and how to handle it. For credit card fraud prevention, familiarize your business employees with those guidelines so that they can halt a potentially fraudulent transaction before it occurs.

If a fraudulent transaction does occur, and the cardholder initiates a chargeback disputing the charge, here's what to do.

Contact Your Merchant Services Provider

The credit card company on which the fraud occurred will let you know about the chargeback. You should then alert your merchant services provider about what happened. They can look into how the card has been used with your business and help you halt any other transactions that haven't been fully processed with that card.

Identify all systems the fraudulent card is affecting. It may have been used for different types of card-not-present purchases, both online and over the phone. Work with your merchant services provider to put a plan in place to prevent the card from successfully being used with your business again.

Investigate the Fraud

Collect all the documentation you can on the transaction(s). This can include:

  • All data that the fraudster provided you during the transaction, including shipping address, phone number, and email address.
  • Data that occurred post-sale, such as a package signature. You should also look into any camera footage that is available relating to the transaction. For example, if a package was delivered to a P.O. Box, you may be able to obtain footage of the fraudster or an accomplice going to retrieve the goods.

Provide this data to the credit card company that has experienced the fraud. Having this information will also help strengthen your case when you report it to authorities.

File a Police Report

Approach police about the crime that has occurred against your business. The police may already have a lead on the criminal who worked against your business. If the criminal is apprehended, you may be able to recover some or all of the losses you've suffered.

File a Report with the Federal Trade Commission

The Federal Trade Commission (FTC) encourages fraud victims to file a report with the agency, which can then investigate the fraud and take enforcement actions.

Contact Customers

If your business has experienced a data breach where customer data was made vulnerable to hackers, your business should contact its customers who may have been affected and let them know.

Prevent Future Fraud

The best way to avoid credit card fraud for your business is to employ credit card fraud prevention. Use a trusted merchant services provider that enables your business to:

  • Use multi-factor authentication.
  • Use encryption.
  • Accept EMV chip cards.
  • Use PCI-compliant merchant services.

You may also become a victim of credit card fraud if you give credit cards to employees who use them to commit fraud. Only give company cards to employees you trust, and monitor their use vigilantly.

Humboldt is a merchant services provider that provides safe payment processing to diverse retailers around the country. We'll set you up with secure point-of-sale systems that provide credit card protection for your business. Learn more.


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