The Importance of Fraud Protection

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A 2016 Nilson Report estimated that fraud losses related to credit cards topped $24.71 billion in that year alone. Those numbers have only increased since that study was done, and businesses like yours simply can’t afford the cost of fraud today. In fact, one survey found a small business will spend nearly $40,000 just to recover from a security breach. As fraud becomes more and more relevant to companies in nearly every vertical, learning how to protect your company from fraud is essential. These tips can help.

Move to Chip Cards

EMV chip cards can help you with credit card fraud protection. The United States has one of the highest fraud rates of any other country today, and a big part of that has been its slowness to move to the EMV chip system, something many businesses are just starting to do. The UK saw nearly a 70% decline in fraud when they moved to the same system. You’ll need to talk to your processor to get the required equipment, but it could help you create a consistent cardholder experience and avoid liability.

Watch for Potential Problems

If you’re handling a card present transaction, keep an eye out for potential signs of fraud, and train your employees to do the same thing. Simple things like a customer purchasing a large number of pricey items or trying to rush you through a sale when it’s closing time are indicators you may be processing a fraudulent sale.  Having a customer who tells you their card is damaged may also indicate a fraudulent sale.

Follow the Right Procedure for CNP Transactions

If you process a lot of online sales or you take orders over the phone, you’re processing CNP, or Card Not Present, sales on a regular basis. Take a few extra precautions with these kinds of sales. Watch for orders that include several items of the same type or nature. You should also take extra care with orders that are made up of bigger ticket items. Rush orders, too, can be a problem, as are those that fail the Address Verification Service you’re using. International orders may pose a problem, as may orders that have made multiple attempts to pass through your system.

Keep Friendly Fraud in Mind

Friendly fraud is just as dangerous as any other type when it comes to your business’ costs. This happens when a customer asks their bank to issue a chargeback, even if the refund is unwarranted. Chargeback fees can be incredibly damaging to a company, but it’s really easy for a customer to initiate. Often, credit card websites display a “Dispute” button next to every single transaction, and you not only have to give the customer his or her money back, but you also have to pay a chargeback fee of as much as $50 per transaction. It’s tough to reverse chargeback fees once they’ve gone through, too. Good communication with your customers from the start can help, as can setting clear expectations about the sale from the outset. Even taking an added step like confirming that shipments successfully reached your customer is a helpful step.

Report Fraud

The final step in protecting your business from the costs of fraud is to report it the moment it happens. If you suspect that you’ve processed a fraudulent transaction, be sure to call the credit card’s authorization center at that moment. Tell them you have a “Code 10 authorization request.” If the customer is still with you, be sure you remain calm and avoid alarming him or her. Hang onto the card if it’s possible. The operator will ask you a series of questions, and if necessary, you may be asked to contact the police. It’s also important you contact your bank and your credit card processor at some point after you’ve discovered fraud occurred.

Credit card fraud is a growing problem, and the single best way to prevent it within your company is to continue learning how it might occur and what you can do to save your company from the hassle of dealing with it. Because fraudsters are continually changing their tactics, you may want to consider reading fraud prevention blogs and even attending webinars that could help on a regular basis.

For information on how Y2Payments system works, give us a call today at 888-693-1850.

How to Manage Chargebacks Better

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It’s happened again. You get yet another alert that a credit card chargeback has occurred. Now your funds are tied up until the dispute process is complete. You might win the process, you might lose the process. Either way, though, you’re dealing with a frustrating situation that you shouldn’t have to fight. It impacts your business, and it could hurt your customer base. How can you manage chargebacks better and get your business back on the road? Take a look.

Understanding the Process
What are chargebacks, exactly? A chargeback occurs when a customer is unhappy with the charges on his or her card, and contact the card company. The funds are debited from your account, then held in escrow while the investigation takes place. You’ll be asked to take a closer look at the order in dispute, then provide any evidence that the chargeback is not valid.

Customers typically file a chargeback if they didn’t receive the product or service, the product or services weren’t as described, or they claim the transaction was fraudulent for one reason or another or the cardholder may simply want to avoid accepting his or her financial responsibility and blatantly defraud the business. As the merchant, you have to decide whether to fight the chargeback or give the customer his/her money back.

End the Chargebacks
Obviously no business wants to deal with or manage chargebacks, but there are a few things you can do to help eliminate disputes.

First, start by creating a process your employees can follow easily that helps to reduce any potential errors on your end. For example, something like processing a transaction more that once or entering the wrong amount can cause a chargeback.

Educate your employees so they know how to use the system well. You’ll also want to know and understand the signs of credit card fraud. While this can be a bit tougher if you work with a digital system or phone-based sales, but developing a program to help educate your employees to spot and deal with fraud can help immensely.

Finally, keep your focus on your products and services. Answer customer questions promptly. Make sure your advertising matches your products, and follow your industry regulations carefully.

Chargebacks are never a fun process, but we can help to simplify things a bit. To learn more about how Y2Payments handles chargebacks, contact us today.