Giving Credit Where Credit’s Due
Protecting your business from credit card fraud
Electronic purchases are wonderful in many ways. They make it easy for consumers to pick up a phone, click a mouse or swipe a card and access the funds to do business with us. Unfortunately, more sophisticated banking methods have also bred a more sophisticated bank robber. No longer do they have to resort to holding up a bank to steal our money – they simply cut out the middleman and hit us right on our bottom line. The floral industry is especially vulnerable to credit card fraud because so many orders are called in by phone and increasingly by the Internet. It may seem as though there isn’t much that merchants can do to protect themselves and their customers. However, with a few defensive moves, the chances of your business being victimized can be reduced.
 |
The floral industry is especially vulnerable to credit card fraud because so many orders are called in by phone and increasingly by the Internet.
|
Credit Card Fraud is a Real Issue
Orders taken by credit card by phone, fax or Internet, fall under the category of “card not present”(CNP) – which means that if the card is being used fraudulently, the florist is liable for the transaction if it’s disputed. As the floral industry continues to use Internet ordering more frequently, the potential for credit card fraud increases and so does merchant exposure. A recent Australian study found that 32 per cent of the small businesses they sur-veyed were victims of online credit fraud. This study found that booksellers were the most common victims, followed by toy and game retailers, com-puter hardware retailers, florists and music stores. Unfortunately, only 21 per cent of the incidents were reported to police. Flowers Canada reported a scam in 2003 targeting florists in particular that involved the perpetrator calling in a floral order and requesting extra cash along with the order for pick up. The thief would explain that they wanted to give the cash along with the flowers as a birthday or shower gift. The floral shop would then be out the cost for the floral order and the cash. It’s frustrating for a small business to have to absorb these kinds of costs, but a combination of vigilance plus technology can put some decent roadblocks in the way of would-be thieves.
Staff Training is Vital
The key to a successful anti-fraud program is staff training. Make sure that for in-store sales, your staff is diligent about checking the signature on the back of the card against the signature on the receipt. It’s also important for employees to understand that just because a card’s authorization goes through, that doesn’t necessarily mean that the person using the card is actually the card owner. Most customers will appreciate the fact that you’re protecting them by checking signatures, but for those who might take offense, consider posting a sign reminding customers in a nice way that checking their signatures protects everyone from the high cost of credit fraud. While obtaining and checking a signature for in-store purchases will protect you from fraud, what about those higher risk “card not present” purchases? Is there anyway to stay one step ahead?
Technology is Making Strides
Card technology has come along way towards mimicking card present transactions. Many card companies have introduced security features into their cards that allow consumers to register their cards with a password. The merchant then uses specialized software at time of purchase that can verify that the password matches with the card. Once this is complete, the liability for the purchase transfers from the merchant to the bank that issued the card (as it is with card present purchases). Verifying the security code (3 digits on the back of some cards and 4 digits on the front of others) is also a way to ensure the card user is also the card owner. This code is not part of the regular card number and doesn’t appear on any receipts. Theoretically, it’s only known to the card holder so, a thief who finds or steals a receipt with a credit card number on it wouldn’t have this vital piece of information. If a customer has a free e-mail address such as hotmail or yahoo – it’s easy to get these accounts anonymously. Utilize the address-checking system or make a phone call to confirm the address, especially in the case of large purchases. It’s also advised to make sure it’s clear on the customer’s bill exactly who they’re doing business with. If your merchant account is in the name of another company (perhaps a numbered company that owns your operation), the customer may not recognize the listing on their bill and think the charge is not legitimate and dispute it.
If you see your CNP transactions growing and anticipate more online orders – consider engaging the services of a third party transaction processor. Many of these providers specialize in checks and balances that can flag a suspicious situation. One such vendor is Caledon Cards at www.caledoncard.com. Value- added vendors such as Caledon could provide businesses of all sizes a fraud protection package that will allow merchants to grow their CNP business transactions with less risk. Let’s face it; each fraudulent transaction saved goes directly to your bottom line. Where it belongs!
Michelle Brisebois is a marketing professional with experience in the food, pharmaceutical and financial services industries. She specializes in brand strategies.
|
