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7 Useful Tips to Prevent Credit Card Processing Scams

July 12, 2019

Credit card fraud will lead to $31 million in losses by 2020. Cybercriminals are increasingly targeting not only large corporations but also small businesses. Here are some tips to protect your bank account and reputation and thwart credit card processing scams.

1. Make use of Address Verification System (AVS)

This system compares the numerical portion of the consumer’s address with the information provided on file. During a purchase, the customer enters info along with credit card details. The merchant receives one of six codes - full match, partial match address, partial match zip code, no match, international, and unavailable. Usually, a full match ensures that there is a minimum of risk of processing the payment; however, there may be cases when AVS is unreliable. For example, the consumer may have moved and not updated his address. 

2. Invest in chip readers

For brick and mortar stores, chip readers help protect against counterfeit cards as EMV technology is more theft resistant than traditional magnetic stripe technology. Moreover, merchants using chip readers are not liable for fraud, even if it occurs.

3. Be wary of suspicious customer behavior

There are certain signs that may indicate criminal activity, so it’s best to trust your gut if you see a customer doing any of the following.

  • Buying too many expensive or unusual varieties of items, such as clothing in multiple sizes
  • Hurrying to checkout at store closing time
  • Instructing you to not swipe their card because it doesn’t work
  • Handing you their phone when they claim to be talking to their bank

4. Be careful when processing online payments

If you are processing a payment online or over the phone, review:

  • Orders that have multiples of the same item but don’t make sense, e.g., multiple phone chargers
  • Orders consisting of expensive items
  • Multiple purchases made on the same day or requested from the same IP address
  • Rush orders
  • Orders that have failed AVS or CID (the three-digit value on the back of the card)
  • International orders from countries where you don’t usually get customers
  • Multiple orders shipped to the same address but purchased using different cards.

5. Use tokenization

Tokenization replaces numbers with a token, such that the credit card number of a customer is not transmitted. Apple Pay and Samsung Pay are examples of this system.

6. Secure your network

There are various measures you can take to secure your network. These include:

  • Using anti-malware software
  • Using encryption
  • Limiting employee access to sensitive data
  • Updating to latest versions of all software
  • Using separate devices for personal and business use
  • Using strong passwords that contain numbers, mixed case letters, and special characters
  • Require two-factor authentication

7. Become PCI-compliant

There is a set of standards in the credit card industry that tell you how to accept, transmit, and store cardholder data securely. By following the PCI Security Standards, you can help prevent credit card fraud.

By following the tips above, you can greatly reduce the risk of credit card processing. However, be aware that fraud may still occur. In that case, make sure you report it immediately to your credit card processor, bank, and even the local authorities.

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Ari Page Ari Page is the CEO of Fund&Grow. He resides in Spring Hill, Florida with his wife and two children.

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