Credit Card Fraud: How to Safeguard Your Business

A few weeks ago, one of our customers Joe called. He was so excited to receive his biggest order in months! He processed the order and then some red flags started popping up. The customer asked to use three different credit cards to cover the order, he asked to pick up the material directly from the supplier, and he changed the state the order would ship to twice. Yes, this was a real phone call received while the “customer” was on the way to the supplier to pick up thousands of dollars in material

The conversation with Joe and the story he relayed had me thinking that no matter how business savvy we are or how established the business, we need to stay alert that the risk to SMB owners is greater than anyone would imagine. In 2017, more than $25 million in fraudulent transactions affected small and mid-sized businesses. That being said, I want to bring to the forefront a few prominent red flags and some actions you can take to safeguard your business.

Red flags

• A brand-new customer calls to place a large order and wants to pay via credit card
• A customer wants to use multiple credit cards for one order
• Orders that are faxed or emailed from out of state or unknown numbers
• Requested shipping to a state you don’t normally ship to, or an out-of-country address

Questions to ask

Whenever you receive an unusually large order , it’s easy to get excited. Take a minute to second-guess the legitimacy of the transaction before you celebrate, and ask yourself:

• Do I have a signed copy of the actual order stating they will pay the amount due?
• Do I have a signed document authorizing my business to charge their credit card?
• Am I expecting my employees to safeguard our company?
• Am I letting my excitement run over my suspicion?
• Do I have a copy of their driver’s license?*

Be the first and best line of defense in protecting your company, do not expect the bank or your processor to “make things right.” Fraud is a terrible thing, but with common sense and a plan we can stop thieves before they end up with our money.

* When you receive the driver’s license, check to make sure it looks legitimate. I’ve requested this myself and have received fake IDs. Take a close look and make sure the name on the license matches the name on the credit card.

ECI's Net1 Payment Processing Solution can help with credit card payments if you're a small business.