By Dr. Ken Knapton, CIO Progrexion.
Credit card fraud continues to be a significant concern for both consumers and businesses. Not only can it result in significant financial losses, but it can also damage the reputation and trust of companies affected by credit card fraud. In a Forbes Advisor poll, 33% of small business owners said credit card fraud is a major issue. A recent survey by CreditRepair.com found that 73% of respondents are worried about being a victim of credit card fraud, with all age groups reporting high anxiety about credit card scams.
Studies show that credit card fraud in the U.S. is on the rise. Insider Intelligence has estimated that card-not-present fraud alone accounted for $5.72 billion in losses in 2022. Every digital company (which arguably describes most companies in business today) must be concerned about credit card fraud and must put time and effort into protecting their consumers from this frequently leveraged attack vector.
One of the best ways for companies to stay on top of this challenge is to stay informed and aware of the different types of credit card scams that are currently being used. The CreditRepair.com survey identified several common scams, including:
- Phishing scams: These involve the use of fake emails, text messages, or phone calls to trick consumers into giving away their personal and financial information.
- Skimming: This is a type of fraud that occurs when a device is placed on a credit card reader, allowing thieves to steal credit card information.
- Identity theft: This occurs when someone uses another person’s personal and financial information to make fraudulent purchases.
To protect yourself and your business from credit card fraud, it is important to take steps to improve your security.
- Protect your devices: Install anti-virus and anti-malware software on your computer systems.
- Be aware of fraud attack methods: Be vigilant when it comes to suspicious emails, text messages, or phone calls.
- Regularly monitoring transactions: Businesses should regularly review their credit card transactions to identify any suspicious activity. This can include looking for large or unexpected charges, as well as charges from unfamiliar locations or merchants.
- Implement fraud detection software: Many businesses use fraud detection software to automatically flag suspicious transactions. These systems use algorithms to identify patterns of fraudulent activity, such as multiple charges from the same card in a short period of time.
- Keep an eye on chargebacks: A chargeback is when a customer disputes a charge on their credit card statement. Businesses should pay attention to any chargebacks they receive, as they can be a sign of fraud.
- Use Address Verification Service (AVS) and Card Verification Value (CVV): AVS is a system that compares the billing address given by the customer with the address on file with the credit card issuer. CVV is a code that is printed on the back of a credit card and is typically required for online transactions.
- Train employees: Businesses should train their employees to recognize and respond to potential credit card fraud. This can include teaching them how to spot suspicious transactions, how to handle customers who may be victims of fraud, and how to contact the proper authorities in the event of a suspected fraud.
Once fraud is detected, businesses should take immediate action to minimize the damage. Companies should have established processes for fraud detection response, which may include:
- Canceling the credit card of the customer whose card was compromised.
- Notifying the credit card issuer and the police.
- Providing the customer with a new card.
- Reviewing internal procedures and making changes to improve security.
- Reviewing their chargeback policy and making sure they have a good plan in place to reduce the impact of chargebacks.
It’s important for businesses to have a well-defined plan to detect and respond to credit card fraud. This can include a mix of technology, employee training, and processes to mitigate the risk of credit card fraud and protect their customers’ information. Credit card fraud is a serious issue that can have a significant impact on businesses and management teams. By staying informed and taking steps to improve security, you can better protect yourself and your business from this type of fraud.
Business owners should always be aware of the threat of credit card scams and take the necessary steps to protect their customers’ information. With the help of the above-mentioned tips, business professionals and management teams can be better prepared to handle and prevent credit card fraud.
Bio: Dr. Ken Knapton is an experienced technology leader and family man. Ken holds three U.S. patents for his early work on plug and play software design, and has earned multiple academic degrees, including a Doctorate of Information Technology, dual Masters degrees in Business Management and Information Technology, and a Bachelor of Science in Computer Science and Information Systems. Dr. Knapton’s doctoral dissertation was a study of big data governance including the ethical use of personal information.