10 Simple Ways to Reduce Credit Card Fraud

Managing Credit Card Fraud is a growing concern for most merchants. Here are some helpful hints on how you can reduce the number of fraudulent transactions in your business. These suggestions are more geared towards smaller businesses that don't have more robust fraud and risk solutions. Larger companies implement much more sophosticated rule based fraud and risk managment tools that automate a lot of this and detect suspecious activity in many more ways.

1. Train operators to pay particular attention to anything suspicious in the way the caller speaks or responds to questions. One simple tip-off is a long pause or a hesitant answer. Make it a policy to request the name of the credit card issuing bank for any sale over a pre-set amount. If the caller doesn't know the bank's name, chances are he or she is using a stolen credit card number.
2. Always ask for the cardholder's billing address. Ask for the cardholder's day and evening telephone numbers "in case there's a question." Orders with a "ship to" address that is different from the cardholder's billing address can be a danger sign. If you are suspicious, attempt to contact the cardholder on a second phone to verify the order. If your system lets you, compare the "ship to" and "bill to" addresses with the catalog's "mail to" address.
3. Develop and maintain a "negative file" of fraudulent names, addresses, zip codes, credit card numbers and companies you come across. Compile a zip code listing that spotlights areas in which you've experienced high fraud. An ongoing good rule of thumb is to decline "ship to" to prisons.
4. If the address is a P.O. box in a large city, further checking is suggested, especially if the order is from a new customer. Mail delivery services require a street address and will not ship to P.O. boxes.
5. Carefully examine a "rush" order request from a new customer. Be especially alert when the caller appears ready to order whatever merchandise is in stock, regardless of size or style.
6. Carefully examine any order with an unusually high dollar amount or which involves an out-of-the-ordinary situation.
7. For American Express and Optima 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).
8. 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 identify the bank, chances are the customer is attempting a fraudulent purchase.
9. 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 wordmark throughout the signature panel.
10. 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.