How Credit Card Information is Stolen

How Credit Card Information is Stolen

As a merchant you have a responsibility to protect your customers sensitive data, yet every year we hear about massive data breaches and most people with a credit or debit card have received a replacement card due to a breach. While these types of large scale breaches get the most attention, there are other ways to have your card information stolen. In this post we will explain some of the ways that credit card information is stolen, and precautions you can take to avoid it.

Card Skimming

Card skimming is most prevalent on ATM’s and other forms of unattended card readers. This is achieved by placing a small device where you insert or swipe your card that reads the magnetic stripe data to be retrieved later. These can take the form of a false front on the card slot at an ATM or gas station. It can be a small device attached to a card reader. These can also be accompanied by a small camera or pin pad overlay to record the pin number.

The best way to prevent card skimming is to be aware and test devices before you use them. Check that the card reader is securely fastened as most ATMs and gas pump card readers are made to be solid, so if the parts are loose or look out of place, report it to the owner and use a different ATM, gas pump, or avoid using the vending machine, whatever the case may be.

Malicious Software

While most computers have firewalls and security software, hackers are constantly innovating ways to get around them. When  malicious software is installed on the computer or your network they can track keystrokes or intercept data that is then sent to the hacker. This will include logins, passwords, secret answers, etc. To avoid this style of identity theft, ensure that your security software is up to date. Avoid downloading software from unknown sources and ensure that your computer and network are being scanned regularly to detect and remove any possible malicious software.

Dishonest Employees

Sometimes it can be an employee who is perpetrating the fraud. Whether by copying the information using a skimmer, writing down the card info, or taking the data from the office, all of these are potential data breaches. The best way to manage that is to use clear policies regarding who is able to handle card data and that it is restricted to a need to know basis and make sure that you or your managers know how to spot skimmers or potential tampering.
Prevention is your best tool in dealing with fraud because once it happens it can be very costly. If you become aware of an issue, address it right away and contact your merchant services provider for advice on how to minimize any damage caused.

No One Likes Friendly Fraud

No One Likes Friendly Fraud

While most of the time, customers are one of your greatest assets — they spend money, buy goods and help keep everything running– sometimes an unassuming customer can create a lot of headache through friendly fraud.

Friendly fraud occurs when the cardholder disputes a transaction that they knowingly entered into, but then for one reason or another decides to dispute the charge with their bank or credit card company. In this post we want to talk about a few of the ways this happens.

Revenge!

Sometimes, no matter how much you do to appease them, a customer may never be satisfied. While their motives may be unclear, this type of fraudster will dispute the charge for any number of reasons, including delay in shipment, product wasn’t as described, product didn’t meet expectations, and likely due to a strict  or “no” return policy, they decide to initiate a chargeback.

Lazy consumers

We’ve all at one time or another bought something in the store or online, got it home and realized you didn’t really want it. Sometimes the prospect of returning the item seems too much of a hassle, so the consumer calls and disputes the charge. This is more common with high ticket items or lifestyle goods (fashion items).

“I forgot to cancel that subscription…”

Many of us can identify with signing up for a trial or a subscription, forgetting about it, and being frustrated when you realize you forgot to cancel. For some, instead of returning the product (if available) or cancelling the subscription and letting it go, they will take the extra step and dispute the charge.

The sly ones

Sometimes people who understand how chargebacks work will manipulate the system to their advantage. After receiving the product or service, they will lie and say they never received it to get their money back.

While it’s hard to spot friendly fraud on the get go, there are some ways that you can mitigate it. As we always recommend, keeping appropriate records of transactions is always your first line of defense. Additionally, being honest and upfront about your products and what your customers can expect will go a long way towards preventing chargebacks.
If you are an eCommerce site, one way to transfer the responsibility of the fraud is to use payer authentication methods such as Visa Checkout or Mastercard Masterpass. Contact us to learn more about how to integrate these into your checkout process.

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