Helpful Tips for Businesses to Prevent Credit Card Fraud

• Do not allow a transaction to be authorized unless the customer gives you a valid expiration date for the credit card.
• Follow up all card not present transactions with an email to the customers account or with a telephone call.
• Red flags for fraudulent purchases include: bulk transactions, first time shoppers, big ticket items are being purchased, rush delivery, shipping is requested to a different address than the customer or the shipping address is listed as an overseas address, large purchases are being made with numerous credit cards and shipped to a single address, separate purchases are being made but they are coming from a single Internet Protocol address.
• The customer should be required to give you the three-digit number on the back of the card. This will ensure that the purchaser has the card in his or her possession.

Helpful Tips for Consumers to Prevent Credit Card Fraud

• You should save all of your credit card receipts. Each month when your bill comes in the mail you should go over it thoroughly. Check to see if there have been any purchases made that you did not approve. If you find any suspicious purchases, you should contact your credit card company immediately.
  
  
• Keep in mind that a criminal does not have to be in possession of your card to make fraudulent purchases. A criminal can obtain your credit card information and make card-not-present transactions by just knowing your credit card number. You should always shred or burn your credit card statements. To protect yourself even further, you should always keep your bills and credit cards in a safe place away from the eyes of anyone who enters your home.
  
  
• Be patient when you are making card not present transactions. Most businesses are now requiring that you give additional information when you make purchases to ensure that you are indeed the cardholder.

Consequences From Chargebacks

There are several consequences a business can face for receiving too many chargebacks:

• Lost Product
• Chargeback Fees
• Fined by Card Associations
• Placed on Association Monitoring Program
• Loss of Merchant Account
• Terminated Merchant File

How many chargebacks are too many?
Visa®: more than 100 chargebacks with chargebacks in excess of 1% of total transactions.
MasterCard®: more than 15 chargebacks with chargebacks in excess of 1% of total transactions.
What are the Fees for Chargebacks?
A chargeback handling fee is associated with each chargeback. This is a processing fee for handling the chargeback and/or subsequent re-presentment. The fee is not a penalty or a declaration that a merchant is right or wrong.
Preventing Chargebacks
Most chargeback situations arise at the point of transaction—at the time the transaction is completed—and most online credit card fraud can be prevented with a little training and prevention methods.

Chargebacks

A chargeback is a procedure whereby a card holder or the card holder’s bank disputes transactions put onto a credit card.

What is the Process of a Chargeback?

The merchant's account is debited along with any contractual chargeback fee(s) and the merchant must provide proof that the transaction is valid and satisfactory to the rules and regulations of Visa® and MasterCard® to get money back.

1. Bank or processor receives a chargeback from the issuing bank.
   
2. Bank or processor mails notification of chargeback to the merchant, and the amount of the chargeback plus a handling fee (deducted from merchant’s settlement account). If more documentation is required to clarify the chargeback, then it is sought from the cardholder’s bank.
   
3. If a merchant feels that a chargeback is invalid, then the merchant may send his rebuttal and supporting documentation, in a timely manner. Typically the merchant is required to respond within 10 days of the receipt of the chargeback notification.
   
4. If the merchant has a valid rebuttal, then the Bank or processor re-presents the item to the issuing bank and reclaims the funds for the merchant.