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Limiting Exposure to Fraudulent Transactions & What to do if you suspect fraud Facilitator: Janiere Frank Fraud & Compliance Analyst June 16, 2011.

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Presentation on theme: "Limiting Exposure to Fraudulent Transactions & What to do if you suspect fraud Facilitator: Janiere Frank Fraud & Compliance Analyst June 16, 2011."— Presentation transcript:


2 Limiting Exposure to Fraudulent Transactions & What to do if you suspect fraud Facilitator: Janiere Frank Fraud & Compliance Analyst June 16, 2011.

3 Legal Disclosure These materials are provided for informational purposes only and should not be relied upon for marketing, legal, regulatory or other advice. You should independently evaluate all content and recommendations in light of your specific business needs, operations and policies as well as any applicable laws and regulations. Caribbean Credit Card Corporation Ltd. is not responsible for your use of these materials, including errors of any kind, or any assumptions or conclusions you might draw from their use. Use of the following information is the sole and exclusive responsibility of the user.

4 Enjoy the Benefits of the Card System Increased Sales & Customer Satisfaction Consumers spend more when theyre not constrained by cash on hand. Speed of Checkout No more counting change, return checks. Improved Efficiency Can save you time and money by minimizing cash handling and payment reconciliation Currency Conversion ( except Local & US) Settlement is in the currency of your goods regardless of where the cardholder is from.

5 Limiting Exposure to Fraudulent Transactions AGENDA Fraud Prevention Best Practices How to Prevent a Potential Chargeback Transaction How to Minimize Copy Request Card Acceptance Procedures* The Merchant Agreement Identifying the High Risk Factors

6 Counterfeit Cards Cardholders are not the only ones affected by Identity Theft Hackers Internal & External Dishonest Customers Goods not received Goods defective Service not provided Dishonest Employees Obtain cardholder information for personal use at home

7 Merchant Agreement Merchant shall only use Sales Vouchers in the form supplied or approved by the Bank. Merchant must operate under the agreed Merchant Category Code (MCC) Prohibited from disbursing funds in the form of cash

8 Merchant Agreement Merchant will NOT charge any fee for accepting payment by the Qualified Card All goods and services shall be supplied at the same price and rates at which they are offered to other customers of the Merchant

9 Merchant Agreement The Merchant is prohibited from accepting a card to collect or refinance an existing debt processing a transaction for collection of a dishonored check submitting sales draft on behalf of another merchant

10 Minimize Copy Request Copy Request is a request by the Cardholder to the Merchant for a copy of the actual Transaction Receipt.

11 Reasons for Copy Request Satisfy a cardholder inquiry Transaction Information Document (TID) needed for cardholders personal records expense reporting Substantiate a Potential Chargeback or Fraud Report Cardholder Does Not Recognize Transaction Support legal or fraud investigation

12 How to Minimize Copy Request Make sure your Business Name is legible on receipts Change point-of-sale printer cartridge routinely Change point of sale printer paper when color streak first appears Handle carbon paper carefully

13 How to Minimize Copy Request Make sure Customers can recognize your Name on their bills Train your employees to review sales drafts for accuracy and completeness Make sure the customer signs the sales draft & is given their customers copy Merchants who keep copy request to a minimum are more likely to have lower Chargeback rates.

14 CHARGEBACK A Transaction that a Cardholder returns to the Merchant

15 Chargeback Reasons Common Merchant Errors Transaction Amount Differ Card Not Valid or Expired Credit Not Processed Late Presentment Duplicate Processing

16 Transaction Amount Differ Verify that Invoice & card receipt matches or reconciles Ensure that the cardholder signs the Hotel or Rental loss, theft, damage agreement which states that the cardholder is responsible for additional charges

17 Card Not Valid or Expired Take extra care to write the card number correctly on the manual sales draft Once the card is present it should be swiped / imprinted as merchant opens himself to chargebacks (especially MasterCard) Verify Card Features & Card Expiry date Eg. Pay special attention to Hotel guest whose check out date is near the end or beginning of the month A card should not be used before the VALID FROM date

18 Credit Not Processed Deposit credit receipts with your Bank as quickly as possible, preferably the same day as the credit transaction is generated At time of transaction, disclose to the cardholder any policy regarding returns, refunds or service cancellation To avoid currency conversion issues, Do Not process refunds on the POS terminals. Instead forward reversal request to your Bank

19 Late Presentment Submit all manual receipts to the Bank the same day of the transaction Merchants have 30 days from the transaction date to submit all manual receipts Fax or email copy of manual receipts

20 Duplicate Processing Duplicate Processing is one of the top three (3) merchant chargeback codes Provide proof of two separate transactions / Provide proof of PIN present at ATMs Wait for POS terminal response before attempting to process the transaction a second time. Ask Manual Authorization Representative to verify that attempt at POS terminal was unsuccessful / not authorized.

21 Duplicate Processing Reconcile account daily Manual authorization should not be added into the POS end of day net amount Reverse all invalid transactions immediately Ensure that transactions are entered into POS terminal only once and deposited only once Make only one imprint of the card for each transaction VOID & Discard any invalid receipts

22 Chargeback Reasons Top Merchant Chargebacks Requested Transaction Data not received Service not provided / goods not received (defective not as described) Transaction Not Recognized / No Authorization Fraud: Card Present / Absent Environment

23 Requested Transaction Data Not Received Respond to ALL copy requests within 30 days from copy request date. If copy can not be retrieved, request that a credit be processed to the cardholders account (c/back exchange rate) Copy Request retrieved information should be accurate and legible

24 Service Not Provided/ Goods Not Received If a customer request cancellation of a Recurring Transaction, always respond to the request and cancel immediately Ship merchandise before depositing transaction. Process a Name and Address verification before shipment of goods or for services with high values

25 Service Not Provided/ Goods Not Received ATM merchants must provide proof that cash was dispensed Inform cardholder of Hotel/ Motel No Show policy charge Provide proof of product or service delivery Obtain from the delivery service company document with the name and signature of person that collected the item at the shipping address.

26 Service Not Provided/ Goods Not Received Provide Cardholder with our Customer service contact information Test Electronic or Battery operating items before processing transaction Ensure charges are not processed if Cardholder paid by other means (cash/check)

27 Transaction not Recognized No authorization Seek Authorization for all transactions Hotel should authorize transaction at check-in point Do not complete a transaction if the authorization request was declined If you receive a Call message in response to an authorization request, call your authorization center

28 Transaction not Recognize No authorization Ensure that the Doing Business As merchant name and Address is legible on cardholders receipt and matches the name on the cardholder statement Verify all Card Security features and cardholder identification At time of transaction, disclose to the cardholder any policy additional service charges, regarding theft, damages or early check out

29 Fraud Card Present / Absent Environment Provide proof of card presence and obtain cardholder signature Verify cardholder identification and cardholder authorization to use the card to settle the account Copy of card and Photo ID Name and Address Verification check Seek Authorization for all transactions

30 Fraud Report Reasons Lost & Stolen Counterfeit Card Card Not Present

31 Fraud Prevention Best Practices Lost and Stolen fraud types can be prevented at the point of sale terminals. Compare signatures on receipt and card Compare name with valid photo ID

32 Fraud Prevention Best Practices Card Not Present fraud can be prevented at the point of name and address verification check. Verify Name, Address and telephone number Seek copy of card and valid photo ID before processing shipment of goods Cardholder Identification System (e-commerce merchants)

33 Fraud Prevention Best Practices Counterfeit Card fraud can be prevented by checking the card security features. Name on card matches name on receipt The four digit BIN number matches the first four embossed number on the card Verify valid Visa or MasterCard logo In suspicious situations call your card center for a Code 10 Authorization

34 CONCLUSION There is an increasing shift of payment from paper to plastic. Fraud can be Prevented at the Point Of Sale Terminals Limit Exposure to Fraud by: Adhering to your Merchant Agreement Following ALL card Acceptance Procedures Checking For ALL Valid Card Security Features Ensuring that your Business Name on the Cardholder Billing Statement and Receipts are the Same Avoiding Common Merchant Errors that can lead to potential Chargebacks

35 Code 10 Authorization

36 CODE 10 WHAT DOES CODE 10 MEAN? Code 10 is the term used by merchants when they call an authorization centre to let the centre know that they are suspicious of a card, cardholder, or a specific transaction.

37 BE SUSPICIOUS OF: A card that appears to be altered or counterfeit A card number that does not match the number shown on your magnetic card reader or electronic point-of-sale terminal.

38 SUSPICIOUS BEHAVIOUR CARD PRESENT ENVIRONMENT Random purchases without regard for size, style, color or price Refusing free delivery on large items or high-dollar purchases Attempts to rush or distract sales clerk during transaction Purchases, leave store, then returns to purchase more Large purchases when store opens or just before it closes Ask for cash back with a credit card

39 SUSPICIOUS BEHAVIOUR NON-CARD PRESENT ENVIRONMENT Rush Orders Suspicious shipping addresses Orders consisting of several of the same item Made with multiple cards but shipped to a single address Multiple transaction on one card over a short period of time Multiple shipping addresses If the cardholder is present and offers the card number but is not in possession of the card*

40 CAUTION! A cardholder may have a good reason for behaving strangely so remember to be polite and think rationally.

41 WHAT TO DO IF YOU ARE SUSPICIOUS 1. Do not panic! 2. Hold on to the card. 3. Call the authorization centre and say, I have a code 10 authorization request. 4. Your authorization centre will connect you to the issuing centre 5. If the operator instructs, pick up the card but only if it is safe to do so.

42 Questions and Comments

43 Thank You for your time and attention

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