How to Tell If a Customer's Card is Potentially Being Used Fraudulently

How to Tell If a Customer's Card is Potentially Being Used Fraudulently

Identity theft and other types of credit card fraud are not just disturbing and disruptive to consumers, but they can also take a heavy financial toll on merchants and even jeopardize their solvency. If you own a business that accepts sales via a POS credit card reader, watch out for these signs of potential criminal behavior.

Suspicious Actions

Even the most accomplished criminals can often be spotted if you watch for the signs. Behaviors to be on the lookout for include the following:

  • Makes substantially higher purchase totals than normal.
  • Buys a lot of expensive products.
  • Takes an inordinate amount of time signing the payment receipt.
  • Glances at the signature on the credit card while signing the receipt.
  • Returns frequently to make more purchases.
  • Informs you that they have been having card problems and asks you to call a special phone number to get an authorization.

Unusual Credit Cards

The shopper’s appearance and behavior might not be the only hints of trouble. Pay special attention to the look of the card as well. Watch for cards with misaligned characters or those that are “not quite right” in terms of size and style. If the card’s hologram looks funny, if there is no magnetic stripe or if the signature space seems altered, consider that fraud might be occurring and act accordingly by declining the transaction.

High Concentration of Fraud-Prone Items

Certain pieces of merchandise particularly lend themselves to fraud because they are popular and can be easily resold. These include jewelry, computer and video equipment, electronics, cameras, and shoes. If a potential customer comes to the register with several of these items, that does not necessarily mean the person is intending to perform a fraudulent transaction. However, it is certainly grounds for further investigation and wariness on your part.

Ecommerce Fraud Signals

Obviously, theft does not just occur in brick-and-mortar businesses with cashiers and a credit card reader. Fraud also robs ecommerce enterprises of millions of dollars per year. If you have an online presence, keep these red flags on your radar:

  • The buyer’s IP address does not match their billing address. (This is particularly worrisome if the addresses are in different countries.)
  • Multiple orders from the same IP address in a short period of time, particularly if they are from different cards, customer names, or billing addresses.
  • Orders happen in the middle of the night or on holidays such as Christmas when people don’t tend to shop.
  • Failed verifications such as entering incorrect CVV codes or card numbers.
  • Failed address verification. Instead of assuming that things are fine in spite of this alert, this warrants further investigation on your part.
  • The customer requests expedited shipping that sometimes costs more than the item itself. While there may be a legitimate reason, this is an indicator of possible fraud that you should investigate before proceeding.

Unfortunately, credit card fraud will probably exist for as long as these types of transactions do. However, being aware of some of the telltale signs of criminal activity can reduce the likelihood that you will be a victim. When you run a business, reducing your risk is one of your best tactics for building success.