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a transaction after you have received a “decline” or “do not
honor” message.
If a sale seems suspicious, call the authorization center and
ask for a Code 10 authorization. This is a universal code that
alerts the center that you have concerns about a transaction.
The Code 10 operator will ask you a series of “yes” or “no”
questions to help determine if it is a fraudulent transaction.
Follow the operator’s instructions.
CARD-NOT-PRESENT TRANSACTIONS
If your franchise deals in card-not-present transactions, such
as Internet orders or mail order/telephone order, recognizing
fraud can be trickier because neither the customer nor the
credit card is physically present.
Fraudsters use lost, stolen or fabricated credit cards or
account numbers to steal products and services in CNP
situations. When the actual cardholder receives the statement
with the fraudulent charge and disputes it, a chargeback is
initiated. Until it is settled, the amount of the sale is deducted
from the business’ merchant account and a chargeback fee
is added. Without a credit card imprint receipt or customer
signature to confirm the transaction, it’s very difficult for you to
win a disputed charge, so you’re out the merchandise or service
you provided, the amount of the sale and the chargeback fee.
To help lessen your chances of being victimized by a
fraudulent CNP transaction, always require the cardholder’s
credit card number, validation code and expiration date;
the name that appears on the front of the credit card; the
cardholder’s billing address and phone number; and a
description of the merchandise or services rendered.
Additionally, be alert for incoming orders that:
• Are larger than normal for your business, especially
when you don’t know the customer,
• Include several of the same item or very expensive
items
• Request “rush” or “overnight” shipment,
• Ship to the same address but were purchased on
different cards,
• Charge transactions to account numbers that are
sequential,
• Provide multiple card numbers from a single Internet
address,
• Charge multiple transactions to one card over a very
short period of time, or,
• Ship to an international address, since they cannot be
verified by an Address Verification Service.
AVS is an important service offered by your merchant
account provider that compares the shipping address provided
to the merchant with the cardholder’s billing address that’s on
file with the issuing bank. If the two do not match, do not ship
the merchandise. Ship merchandise only to the cardholder’s
billing address, and consider requiring a certified signature as
proof that the merchandise was delivered.
Finally, share what you have learned with your employees.
Train them in the right ways to handle card-present and cardnot-present
transactions as a first line of defense against
fraudsters.
Preventing credit card fraud is the responsibility of every
party involved in an electronic payment transaction —
merchants, issuing banks and merchant services providers —
and chargeback prevention is critical to the bottom line of all
businesses. These tips will be helpful in addressing both.
Kevin Kobs is vice president of business
development at TransFirst. Find him at fransocial.
franchise.org.
FRANCHISING WORLD NOVEMBER 2015 53