How to detect in-store credit card fraud

What is credit card fraud?

Credit card fraud is when someone uses another person’s credit card or account information to make unauthorized purchases or access funds through cash advances. Credit card fraud doesn’t just happen online; it happens in brick-and-mortar stores, too. As a business owner, you can avoid serious headaches – and unwanted publicity – by recognizing potentially fraudulent use of credit cards at your business.

The following signs can help you identify potentially fraudulent credit card transactions before they happen.

Suspicious shopper behavior

Not all customers who have one or more of these traits are committing credit card fraud, but in some cases, customers exhibiting these signs could be up to no good.

Does the customer:

Appear nervous, agitated, or rushed?
Appear to be making indiscriminate purchases (e.g., buying items without regard to size, cost, etc.)?
Ring up purchase totals substantially greater than your average customer?
Appear to be purchasing an unusual number of expensive items?
Take an unusual amount of time to sign the sales draft?
Look at the signature on the back of the credit card as he or she signs?
Carry on a conversation to distract you from checking the signature?
Return repeatedly in a short amount of time to make additional purchases?
Tell you he or she has been having problems with his or her credit card and ask you to call a phone number he or she provides for a “special” authorization?

Suspicious credit cards

Not all credit cards look the same, but most of them do have features that are consistent. As customers swipe or dip their credit cards, look for these issues below.

Does the card:

Have characters that are not the same size, height, and style?
Have characters that are not properly aligned?
Appear to be re-embossed?
Have a damaged hologram?
Lack either a magnetic stripe or a chip?
Have an altered signature panel?

While these signs don’t necessarily prove fraud, they’re red flags. When in doubt, you’re better off declining a transaction you suspect is fraudulent.

Suspicious transactions

Certain types of merchandise are especially prone to fraudulent credit card purchases. Not surprisingly, the list includes many types of merchandise commonly targeted for shoplifting or theft. The reason: They’re products that can easily be resold.

The following are merchandise types that are prone to credit card fraud:

Jewelry
Video equipment
Stereo equipment
Computer equipment
Camera equipment
Shoes
Men’s clothing

Here’s a tip: Be suspicious of transactions with more than one fraud-prone item (e.g., two tablets, three gold chains, etc.). Also look for high dollar amounts on transactions. Transaction values well above your average transaction value should raise a red flag. Not all high dollar value transactions are fraudulent, but they at least warrant review.

How can we help?

If you want to learn more about how Clover can help you accept payments, run your business and sell more, please contact your Clover Business Consultant. You can also follow us on Facebook and Instagram.

This information is intended solely for informational purposes and should not be interpreted as legal, financial, or tax advice. Readers are strongly advised to consult with their attorneys, financial advisors, or tax professionals to obtain guidance tailored to their specific circumstances.