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Top 10 fraudulent transaction red flags

October 1, 2013

By Anne Heraghty, Veracity Payment Solutions

Data breaches aren’t the only way merchants experience fraud. During busy times — like the run-up to the holiday season — it’s easy for merchants and sales staff to overlook the security fundamentals of card transactions.

Fraudsters know you’re busy during this time, and they know that transaction values are often at a peak; this is not the time to lower your defenses. You should be on the highest security alert because you’ve got more to lose.

Typically, the most common types of fraud put you on the receiving end of customer ID theft via phishing attacks, social networks, malware, and card skimming. They include the whole gamut of card-present and not-present purchases and even debit card cash-advance fraud. Gift card theft and forgery also are on the rise.

Fortunately, there are signs to look for to stop fraud before it gets the best of your business. Here are 10 transaction red flags. Transactions like these might be legitimate, but they always deserve a second look:

  1. A new customer, especially from out of the area.
  2. Multiple card entries for high-dollar orders.
  3. Billing and shipping information don’t match.
  4. Multiple purchases of the same item.
  5. Multiple transactions from a single IP address.
  6. Sequences of similar account numbers.
  7. One card used for sending shipments to multiple addresses.
  8. Several cards used for shipping to a single address.
  9. International shipping.
  10. An unsolicited phone authorization for a cash advance.

You can help minimize the risk of these fraud incidents by imposing company-wide procedures that include online mapping of shipping addresses, business name searches to check legitimacy, card validation without exception, and verbal authorization from issuing banks for any suspicious transactions. It’s also a good idea to set a transaction threshold above which management-level signoff is required.

They say that an ounce of prevention is worth a pound of cure. In the case of fraud prevention, it’s certainly less painful and costly. When you and your employees are vigilant, you protect your customers and your business’s reputation.  

For more information or backup on questionable transactions, don’t hesitate to call Veracity’s Lansing office: 1.888.599.2209.

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