How to Reduce Your Risk of Fraud Related Chargebacks

Credit card fraud is a very real risk for consumers and merchants alike. Nobody wins when credit cards are used fraudulently. For merchants, credit card fraud chargebacks can be a double whammy on the bottom line.

As part of an ongoing series, BluePay is sharing advice to merchants who accept credit cards on how to avoid credit card chargebacks. IfToday, we’re focused on fraud-related chargebacks.

Tips for Avoiding Credit Card Fraud Chargebacks

Credit card fraud can occur whether the card is present or not present. Best practices for avoiding chargebacks due to fraud can be broken down along the same lines.

Card Present Transactions:

  1. Obtain an authorization for all transactions. Sounds obvious, right? You’d be surprised how many credit card fraud cases occur because merchants failed to obtain proper authorization. Criminals realize many businesses are busy and will often exploit distracted sales associates.
  2. Swipe card transactions through your electronic authorization device to capture Cardholder information and ensure the displayed card number matches the number on the Card.
  3. If you are unable to swipe the card, make an imprint of the card. Manually entering the information into a credit card terminal or virtual terminal does not protect you from fraud chargebacks. Make sure to manually write all pertinent information relating to the transaction, including transaction date, dollar amount, authorization code and merchandise description.
  4. Get the cardholder’s signature for all transactions; make sure the signature on the sales draft matches the signature on the back of the card.

Card Not Present Transactions:

  1. Participate in trusted fraud prevention tools such as Verified by Visa and MasterCard SecureCode.
  2. Use PCI-compliant data security tools like Address Verification Services, CVV2, CVC2 and CID Verification. While transactions that use these tools may still be disputed, these tools may be helpful to you in deciding whether to accept or reject the transaction.
  3. Ensure you ship merchandise ONLY to the AVS confirmed address.
  4. Obtain proper authorization for all transactions.

It’s a good idea to educate your staff on the processes and procedures to avoid point of sale (POS) fraud. While fraudulent activity can strike any business, taking a few proper precautions can help you avoid costly credit card chargeback fees. 

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.