How to Recognize a Potentially Fraudulent Credit Card User

With the recent data security breaches at Target, Neiman Marcus and other retailers – along with the threat posed by the HeartBleed bug – consumers and merchants alike are highly anxious about online credit card fraud and identity theft. Online retailers are taking steps to tighten up security around credit card transactions and credit card information storage.

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 in offline settings.

While not proof that a transaction is fraudulent, the following signs can help you identify potentially fraudulent credit card transactions before they happen.

Suspicious Shopper Behavior

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

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 a magnetic stripe on the back of the card?
  • Have an altered signature panel?

While these signs don’t 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 VCRs, 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 BluePay Can Help

Maintaining high standards of payment security is an important step in keeping credit card information secure and reducing the risk of fraud. BluePay provides PCI-compliant credit card processing, using security practices such as end-to-end-encryption and credit card tokenization.

Click here to download our whitepaper on tokenization [PDF], or contact us to learn how we can help you get started with PCI-compliant payment processing today.

BluePay Processing, LLC is a registered ISO of Wells Fargo Bank, N.A., Walnut Creek, CA, U.S.A.
BluePay Canada ULC, is a Registered ISO/MSP of Peoples Trust Company, Vancouver, Canada.