There’s an inherit risk involved with credit card transactions. Confirming the validity of a charge is much more difficult when both the card and card holder are not physically making the transaction. Business owners can minimize risk by looking for the following red flags.
Lack Of Authentication
Assuming the individual using the credit card indeed exists, businesses don’t know the validity of the card or the location of the consumer using it. The challenge of authenticating transactions online often leads business owners to transition this from an online process to a call center. Call centers are an example of a card not present environment, where the validation process is done over the phone. Fraudsters outside of the U.S. have found a way to leverage phone technology to remain invisible. Increasingly, scammers in Eastern European countries and Asia have been enlisting the help of third party services to mask phone number origination. There has also been an increase in the use of relay services, phone technology designed for individuals with hearing or speech disabilities. If businesses are taking calls to authenticate transactions, an extra level of validation should be implemented. Asking for a copy of the consumers driver’s license or completing a “Code 10” authorization process both serve as additional levels of authentication.
As a business owner, it’s normal to get excited over the thought of large quantity orders. However, it’s important to note that the larger the order, the more a “risk radar” should go off. Merchants have had fraud scams attempted against them where fraudsters request 100 units of a product that typically only sells one unit at a time. Merchants process a credit card payment for this transaction, the merchandise is shipped, and the merchant is under the assumption that the money will remain in their account. Unfortunately, the way charge back rules are written, a consumer has 6 months to allege fraud or allege misrepresentation. This means there is a six month window where merchants can be hit with charge backs. When sending out larger than normal amounts of merchandise, business owners must be 100% sure of the validity of the consumer. If it’s too good to be true, it probably is.
Immediacy On Merchandise Shipping
When a consumer pressures a business to ship merchandise out immediately, regardless of the cost, this is a red flag. This pressure tactic is taken a step further when the scammer threatens job loss to employees over the phone. This is typically seen at call centers. A call is received where the scammer pressures to have merchandise shipped quickly, convinces the employee they know the owner and threatens the employee will be fired once the owner is contacted. As a business owner, card not present transactions and different scenarios should be discussed in order to implement best practices for your employees to follow.
When dealing with a business to business transaction, merchants should do their due diligence on the contact information being provided. If the alleged buyer is another business and their email address ends in a Gmail, Yahoo, Hotmail or any other free email service provider, consider this a significant red flag. Contact information should typically be easily backtracked by reverse searching it through google. The phone number, person, website and email address associated with the buyer should track back to the location where the merchandise is scheduled to be shipped.
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