Avoid Point Of Sale Fraud

Fraud affects almost every merchant at some point. Fraud causes merchant chargebacks, leading to higher operating costs,

Fraud affects almost every merchant at some point. Fraud causes merchant chargebacks, leading to higher operating costs, resulting in higher prices. Simply put, fraud affects us all.

The best place to prevent fraud is at the point of sale, by making sure your employees follow these simple guidelines for every credit card transaction accepted:

1) Follow Procedures
If you are suspicious for any reason, call for a Code 10 authorization. If you have an electronic POS terminal, always swipe every card, even if the customer tells you that the magnetic stripe is damaged. If there is no response, or the message is garbled, call for an authorization and take an imprint of the card. If the card looks deliberately damaged, call for a Code 10 authorization.

If the magnetic stripe is not reading, key in the number manually, and take an imprint with the cardholder’s signature. Always call for authorization at the time of sale, and if suspicious, call for a Code 10 authorization. If you make sure there’s a paper trail with signed receipts and credit card slips, then there’s a good chance you can prove that the merchandise was delivered to the cardholder and avoid a costly chargeback.

2) Check the Card
Be sure to check the signature on the draft against the signature on the back of the card. If the signatures do not match up, have the customer sign again or ask for another piece of I.D. If you are still not satisfied, call for authorization to confirm the validity of the card. Always check the expiration date. Cards are often mistakenly used before their initiation date or after their expiration date. Pay particular attention to the 4-digit printed number (BIN) to the left of the embossed account number, above or below. It should match the first digits of the embossed account number. If the printed BIN is not there, the card is most likely counterfeit.

Be especially careful with gold cards. Because of their higher spending limits, gold cards are favorite targets of fraud artists. Make sure the customer’s address and phone number match up, and be particularly cautious with orders when cardholders live out of the country and/or merchandise is being shipped out of the country.

3) Learn Fraud Signals
Train your staff to recognize suspicious transactions, such as orders that are much higher than usual and multiple orders on the same card in a short period of time. Watch for customers who buy several items without regard for the price, size, or color. Often, they are using a counterfeit card to load up on merchandise before the card is detected.

Keep an eye out for “check-out bullies.” The bully’s objective is to make such a commotion that the cashier becomes intimidated and rushes the purchase without following proper authorization procedures. Be suspicious of phone order requests for delivery to hotels, office complexes, and post office boxes. Items delivered to a non-residential address may be impossible to trace and could be charged back to you if the transaction is questioned.

Another trick of thieves is to purchase big-ticket items shortly before closing in an attempt to rush the sale and avoid authorization procedures.

4) Safe Practices
Always keep the transaction slip and the merchandise behind the counter until the sale has been completed. This prevents anyone from stealing your signed copy of the sales draft, or from running out of the store with your merchandise if the authorization is declined.

Only accept a card from the card holder. Never accept a letter that claims to give a customer permission to use someone else’s card. Only the authorized signatory can use the card.

Do not accept credit card payments over the phone, by mail, fax or on the Internet unless you have a special merchant agreement. These agreements can be obtained by contacting Global Processing Systems. This will help protect you business from paying for chargebacks due to fraud.

5) Merchant Beware
There are seasonal fraud specialists who do not have their own merchant accounts, and will often approach legitimate merchants. They will typically offer you a kickback in exchange for depositing transactions through your account. It is important that you only process your own transactions. This could cost you not only the money lost due to fraud, but also the ability to accept credit cards permanently from any merchant service provider in the country. Be safe and only accept your own business transactions.

Avoid high-pressure telemarketers who push you to buy paper, toner or other supplies for your Global Processing Systems merchant services account. Purchase supplies only through Global Processing Systems.

Educate your staff, and make sure they know the proper procedures for accepting credit card transactions and that they follow card acceptance procedures at all times without exception. Timely accounting and reconciliation of your receipts can help pinpoint potential account problems quickly. Tell your staff to report anyone who tries to coerce them into “skimming off” account data from the magnetic stripe on a credit card. Some crooks use wallet-sized, cordless devices to retrieve this information and produce counterfeit cards.

Following this advice will save you money and stress as you operate your business.


We're happy to answer any questions you may have, feel free to call us at
(866) 823-1960

Contact Our Sales Department

We're happy to answer any questions you may have, feel free to call us at
(866) 823-1960