How to prevent Business Credit Card Fraud

How to prevent Business Credit Card Fraud image

The popularity of card use is rising and is on course to keep doing so. In 2017, debit card payments surpassed cash payments for the first time ever. With businesses keen to streamline the customer’s experience at the till they need to be aware of the kind of risks that card payments carry. With rising card use, this means card fraud is also on the up. So, what are the risks, and how can we prevent it?

Types of credit card fraud:

Cardholder Present Transaction

This is the type of transaction where the payment details are captured in person. Whether you’re paying contactless for your morning coffee or manually entering your PIN at the checkout, the transaction is a physical one with the customer present at the time. With this type of fraud, your liability is reduced if the transaction is disputed. However, just because it’s reduced doesn’t mean you’re completely cleared.

Card Not Present (CNP) and Mail and Telephone Order (MOTO)

This type of transaction will occur without the customer being physically present. So through online purchases, phone orders, invoices that are paid online or recurring payments that are billed and paid automatically.

The recorded cases of CNP fraud has been climbing year on year and isn’t slowing down anytime soon. From 2017 to 2018 documented cases rose by a huge 47%, so you’ll want to protect yourself sooner rather than later.

How to prevent Business Credit Card Fraud and what should I look out for?

Scammers are looking to take advantage of CNP transactions. Knowing that the business owner can’t be there to physically check the card or even meet the cardholder, the fraudsters have much easier methods to perform fraud.

It’s common for fraudsters to make payment online or over the phone and then ask to collect the goods through a friend/relative or couriers service. This is because their address cannot match that of the authorised card owner, which is a huge red flag you need to be wary of.

Look out for last-minute delivery address changes or requests to send to temporary addresses like hotels, guest houses or even PO boxes. Sometimes this could be a legitimate request, but if something doesn’t feel right, it probably isn’t.

Watch out for bogus Payment Service Provider employees claiming there’s a problem with your terminals that needs looking at. If you haven’t been in touch with your provider, call them up to double-check that they haven’t sent someone out. The chances are the fraudsters will have left before you’ve dialled the number.

In some cases, fraudsters try to pay with a damaged card to bypass chip and PIN and magstripe checks, so watch out for this.

When fraudsters target you, you don’t just lose a sale, but you’ll be legally required to reimburse the amount back to the legitimate cardholder.

What can I do to prevent this?

You’ll want to train your staff regularly in what they need to look out for and how they can prevent fraud happening. Refresh the training anytime a new type of fraud emerges or scammers create a new way to defraud businesses.

Even if the card authorisation has gone through, but you still feel like something is off, you could be right. If the transaction has passed all the checks, it just means that the card hasn’t been reported as lost or stolen and the funds are still available to use.

If you perform online transactions, you’ll want to implement 3D Secure authentication checks on your website. This helps reduce online fraud and complies with PSD2. You’ll also want to choose a PSP who runs their fraud checks for every transaction. Add a little extra security by implementing the Address Verification Service (AVS) and Card Verification Code (CVC) or what’s more commonly known as CVV, CSC or CVV2.

It’s happened to my business, what do I do now?

If you become a victim of card fraud and are not able to recover your money, the first thing you need to do is report it to Action Fraud. They’re the National Fraud & Cyber Crime Reporting Centre. You’ll be provided with a Crime Reference Number which will be useful when the police look into your case.

Customers want their experience to be streamlined but with ease of service creates an opportunity for scammers to take advantage so stay alert, refresh your training and help prevent your business from falling victim to card fraud.


Keep up to date
Subscribe to get business news and tips direct to your inbox.

Thank you!

NACFB Members
BMCAA Members
FSB Members
Cyber Essentials Accredited