Dealing With Customer Credit Card Fraud

Credit card fraud is a major problem around the world.

Ultimately, credit card companies protect individuals. Therefore, small businesses are the ones who lose the most when fraudulent credit card transactions take place.

In order to keep your small business from becoming a victim, there are steps you can take to lessen the chances.

Prevalence of Customer Credit Card Fraud

American consumers rely heavily on credit cards to make their purchases.

As a result, Americans experience a high rate of credit card fraud. According to the Aite Group, an independent research group that focuses on small business, 42 percent of Americans have experienced credit card fraud.

This places the United States second, only to Mexico, for incidents of credit card fraud. Of the 17 countries surveyed, The Netherlands and Sweden had the lowest incidents of fraud, coming in at only 12 percent each.

Government Attempts to Combat Credit Card Fraud

The government takes steps to combat credit card fraud nationwide.

One way the government accomplishes this is by educating the public on credit card scams. Telling people what to look for and how these scams occur goes a long way to preventing fraud.

The government also offers a website that allows people to report credit card fraud. Individuals and businesses can report any incidents of fraud or suspected fraud and government officials may follow up with an investigation.

How Online Businesses can Prevent Customer Credit Card Fraud

Businesses can take several steps to prevent fraudulent transactions.

One of the best ways to prevent fraud is to be on the lookout for patterns of fraud.

Online businesses may be particularly susceptible to credit card fraud. Businesses should look for suspicious orders and conduct research prior to shipping items that may have been ordered via a fraudulent transaction.

Look out for high volume orders and overnight shopping.

Thieves often want to get their products as soon as possible before the fraud is caught. Also, look for orders where the billing address and the shipping address do not match.

Another thing to be on the lookout for is the customer's email address.

Fraudulent customers tend to use free web-based email addresses, such as Hotmail or Yahoo, because they can be more difficult to track.  Sometimes email addresses will include random letters and numbers as well to help mask the user's identity.

How Brick and Mortar Stores can Prevent Customer Credit Card Fraud

Brick and mortar stores have a few advantages compared to online orders only.

For starters, brick and mortar retailers get to see the customer in person. This can be instrumental in identifying fraud.

Request the customer's signature for every credit card transaction. Verify the cardholder's signature on the card and make sure it matches the signature on the receipt. If the card isn't signed or there is further question about the customer's identity, ask for another form of identification.

If a customer is returning an item, don't give cash back. Instead, credit the money directly to the customer's card. Display your return policies prominently to discourage fraudulent returns.

If you are suspicious about a customer's transaction, contact the credit card company directly. Provide them with the information and they can help you determine whether or not to follow through with a transaction.

Businesses should take steps to prevent fraudulent credit card transactions.

However, it is equally important to ensure your measures aren't so stringent that you are deterring legitimate business.