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Intuit
8 helpful votes

Prevent credit card fraud

Learn how to protect your business from credit card fraud.

As a business owner, you need to know how to protect yourself against credit card fraud and chargebacks.

All major card issuers (Visa, MasterCard, American Express, Discover, etc.) offer unique features to help identify fraudulent cards and protect you from fraud.

It's a good idea to visit the websites of card issuers periodically to keep up with the latest technologies and familiarize yourself with the card issuer's security features.

Use the customer's driver's license or ID card to verify the name and address. Compare the signature on the driver's license or ID card with that on the sales slip.

If in doubt, don't hesitate to turn down the transaction or call the number on the back of the card, if present, to verify the cardholder information.

It's a good idea to insist on having customers sign sales slips.

If a customer refuses to sign the slip after you have processed the authorization, void the transaction.

When you manually enter credit card information, the QuickBooks Point of Sale Merchant Service verifies the cardholder's address by comparing information you enter with the customer's credit card bank records using the Address Verification Service (AVS).

Address verification helps merchants avoid credit card fraud and chargebacks for transactions in which the credit card information is manually entered or not physically present at the point of sale.

The address verification process includes the following steps:

  1. You enter credit card information, including the customer's address information. Only the ZIP code is needed to complete the address verification check, but you can optionally enter a street address for extra protection (only the number portion is used in the verification check).
  2. The Address Verification Service compares the ZIP code (and optional street address) you entered with the cardholder's credit card bank records.
  3. The processor returns a message indicating whether the entered information matches the information on file at the cardholder's bank.

The result of the AVS check is for your information only. You can choose to process the credit card payment even if the AVS check indicates a mismatch between the ZIP code or street address you entered and the cardholder's bank address information.

In QuickBooks Point of Sale, you can use the "Do not allow manual transactions that fail address verification" option to specify how to handle AVS mismatches on the Merchant & Gift Services page in Company Preferences.

  • If you clear this checkbox, the AVS check results are displayed, but you can still process a transaction at your discretion. Note that processing AVS mismatches increases your risk.
  • If you select this option, you automatically disallow manually-entered transactions that fail the address verification check. Therefore, you can't complete a credit card transaction.

This option provides a degree of protection against fraud and chargebacks, but may also block legitimate transactions.

Additionally, some merchants choose not to accept transactions or ship merchandise to addresses other than the billing address for the account. You should be especially wary if the customer requests shipment to a PO Box or to an international address.

In QuickBooks Point of Sale, you have the option to disallow manually-entered transactions where the entered card verification code does not match the card issuer's records.

This check helps to ensure that the customer actually has the card in their possession at the time of the sale.

Some issuers automatically decline the transaction when a mismatch occurs, while others allow you to use your discretion in accepting such transactions.

Check with the card issuer for guidance in handling mismatches.

Asking for a cash refund on a credit card transaction is a strong indicator of credit card fraud.

In some cases, the cardholder may also file a dispute for the transaction after receiving cash, resulting in a possible chargeback to you as well.

To protect yourself from this type of activity, you should refund credit card transactions only as a credit back to the same card.

If you detect or suspect fraud, initiate a voice authorization and request a Code 10 authorization.

The operator will ask you a series of yes or no questions and guide you through the necessary steps.

 

If you think a transaction is fraudulent, decline it and return the card. Call the authorization number after the customer has left to report the fraud.

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