How to detect and prevent card fraud in your business

What are the different types of card fraud?

There are two types of fraud: 

1. In-store or ‘card present’ fraud 

Be aware if a customer is behaving in a suspicious matter. It may be better to lose a sale than to lose the sale proceeds and the goods. Make sure you inspect all credit cards to make sure they are genuine, and also make sure a payment is made by the rightful cardholder. This includes taking steps to spot fraudulent cards such as checking the signature panel, the numbers on the card and expiry date to check if its genuine and valid, as well as taking steps to identify the cardholder.  

2. Online or ‘card not present’ fraud 

Be aware of possible fraudulent activity from online payments or Mail Order and Telephone Order (MOTO) requests. If you’re suspicious of the buyer or the transaction, we recommend that you don't ship the goods - even if a transaction has been authorised. Be cautious of overseas transactions, as well as international and first-time customers.

How can I prevent card fraud?

1. Educate your employees 

You’re not the only one who is integral to protecting your business and customers against fraud. Your staff can help to recognise and report suspicious activities.  

Train your team members to: 

• Verify cardholders 
• Look for suspicious behaviour 
• Check for terminal tampering and be aware of terminal takeover risks
• Protect against card skimming 
• Keep up to date with the latest scams. 

2. Understand transaction risks 

Certain transactions may be considered as high or low risk:

• High risk. First time customers, international customers, manually-keyed transactions into the terminal may carry a higher risk
• Low risk. Transactions that are tapped or inserted into your EFTPOS machine or online transactions that have been authenticated by Mastercard Identity Check™ or Visa Secure may carry a lower risk.
  For information on Mastercard Identity Check™ or Visa Secure  please refer to the Protecting your business against credit card fraud brochure (PDF 150KB).

Be mindful when you are handling high-risk transactions. They are sometimes more likely to generate returns, chargebacks, or result in fraud.. 

3. Keep your terminal secure 

Here are some tips to ensure your merchant terminal is secure when you are taking  in-store payments:  

Do

• Keep your terminal in a secure location 
• Ensure your terminal is in working order 
• Ask for an alternative form of payment if the transaction is declined 
• Train your employees to be vigilant.

Don’t

• Leave your terminal unattended 
• Manually key a transaction if you have the customer’s card 
• Allow a customer to enter their card details manually 
• Process a transaction for a third party or supplier. 

4. Be aware of refund fraud 

A common type of fraud involves employees issuing credits (refunds) to their own account. To avoid being caught, they may create a large debit transaction on a stolen card and then credit the refund to their own card (or cards of family members or friends). In such a situation, it often takes weeks, even months, before the fraud is detected.  

To guard against this type of fraud, we recommend that you:

• Closely monitor all refunds and make sure they match a valid sale
• Check that all refunds are processed to the same card that was used for the original sale.

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