22 Signs of Credit Card Fraud for Merchants (w/ Examples)

October 18, 2021

Even though you shouldn’t have to deal with it, credit card fraud is something that all business owners have to suffer from. And the bigger you get, the more you’ll have to deal with it. There are ways to reduce credit card fraud, but you’ll never be able to get rid of it completely.

When fighting back against credit card fraud, your first plan should be to recognize credit card red flags and have processes set in place for each. Your POS and/or online gateway should take care of most automatic flags, but it’s good to be aware of them so you can customize your responses if need be.

Who does credit card fraud affect?

Unfortunately, no one entirely escapes from credit card fraud, but there are some industries that are victimized much more frequently than others. If you have a business in or sell any of these products, you need to take extra precautions against fraud:

  • Jewelry
  • Video equipment
  • Stereo equipment
  • Computer equipment
  • Camera equipment
  • Shoes
  • Men’s clothing

And while it’s more common for fraud to occur online, these industries are affected both in-store and online.

So what are the most common signs of fraud, and how can we detect online fraud and in-store fraud?

Common signs of credit card fraud

Below are 22 examples of typical (but not absolute) signs of credit card fraud. Take note of which signs are most relevant to your business and talk with your POS provider to determine how the system reacts to these situations.

The idea is to strike that balance between protection and customer convenience. You don’t want to get scammed, but you also don’t want to turn away a big ticket customer due to annoying payment processes.

1. Large orders

Ex: If someone orders a quantity that was way over the usual, make sure to follow up about that order. For example, say you’re an online clothing store, and your average buyer buys 3 shirts but an order comes through for 54. It’s best to have your system set up to flag this transaction and then reach out directly to the customer.

2. Same product, multiple skews

Ex: If someone orders the same shirt in 6 sizes and all different colors, that’s a weird order — especially if you aren’t a bulk t-shirt organization.

3. Big-ticket items

Ex: You only offer one $2,000 item and three orders come through from an out-of-state card.

4. Large orders, multiple payment cards

Ex: Someone puts in a high quantity order back-to-back with the same name and email but 3 separate credit cards.

5. Same address, different cards

Ex: Someone uses 3 cards across 5 orders with the same billing and shipping address. This is a common fraud tactic in electronic equipment retailers.

6. One card, multiple shipping addresses

Ex: Someone buys a bunch of consecutive items to different addresses — especially if they are in different states and are to personal addresses instead of business addresses.

7. Same IP address, different cards

Ex: You’re a B2C and the same computer is ordering a series of products from you with different cards to the same address.

8. Multiple orders, similar card numbers

Ex: An order comes through where the first 12 digits are the same and the last four are switched just slightly.

9. Declined purchase followed by small ones

Ex: Someone tried to order a high price item and was caught by the system, so they are trying with a bunch of small items.

10. Incorrect expiration dates

Ex: An order has the number and security code right but repeatedly messes up the expiration date. Make sure your system flags this after 5 attempts or so.

11. Can’t provide personal info by phone

Ex: If someone calls about placing or following up on an order and can’t confirm any of their billing information apart from the credit card, you should probably dig a bit deeper.

12. Spelling errors or all caps

Ex: If the shipping address comes through as LAS ANGILIES, it’s probably worth looking into and giving the original owner a call.

13. Rush shipping on large orders

Ex: Use your judgment here based on your business, but if you aren’t a B2B plugged into some essential supply chain, exercise caution when someone wants something big as soon as humanly possible.

14. Repeat inquiries about shipping/delivery dates

Ex: Someone is extremely persistent about when and where something will be delivered (earlier than what would be expected). Make sure to ask some more confirmation questions when this occurs.

15. International shipping

Ex: Someone asks for a special request on international shipping. Review these often — especially if they are rare and high ticket.

16. Unaffected by costs

Ex: A customer service operator says they can add shipping but it’s a large sum and the customer doesn’t even hesitate.

17. Disinterest in returns

Ex: A customer says they don’t need to hear or care about returns on a very large purchase.

18. Uses deaf system relay to place orders

Ex: Sometimes people use systems designed for deaf people (third-party services, etc.) to place orders. Keep an eye on these style orders, as they are often an avenue for fraudsters to order without having to interact with a company.

19. Takes a while to sign the sales draft

Ex: Someone flies through every bit of the process but hesitates at the sales draft.

20. Suspicious credit cards

Ex: Credits cards having varying fonts and character sizes, no mag stripe or chip, or a weird-looking signature section.

21. No shopping history

Ex: If someone places a large new order without any shopping history associated with that card and person (especially if you are a large retailer), be careful.

22. Fake email addresses

Ex: Everything is correct except the email address is something like GTI#)!enw@gmail.com.

In-person signs of credit card fraud

You may have a fraudster in your business if they:

  • Get annoyed for things taking too long or appear rushed, nervous, or angry.
  • References the signature on the back of the credit card to sign the receipt.
  • Keeps coming back in on the same day to make separate purchases.
  • Just grabs seemingly random items and throws them in the cart.
  • Tries to keep your attention as you check the signature.

How to detect online and in-person fraud

Apart from the systems and indicators we just mentioned, there are a few other things you can do as a business owner to reduce your risk and loss:

Install DIY fraud prevention systems

Instead of having the system decline certain transactions above a certain amount or quantity, have it redirect to a customer service page or temporarily decline, send an email to an employee, and have them check the credentials manually before approving the transaction.

This is labor-intensive, but if you set the parameters correctly you should be able to only be dealing with potentially fraudulent transactions and not wasting your time.

Work with the right merchant services provider

Merchant service providers with comprehensive services offer chargeback protection and consistently search for the best ways to protect your system through new software and keep you informed of what types of fraud are popular.

In other words, you want to work with an MSP that has your back! We work with smart, driven merchants who want to develop a partnership for years to come.

If you fall into that camp, let’s chat.

Use AVS and credit card codes

AVS, or address verification service, and CVV, card verification value, are two preventative measures you need to make sure your online gateway checks for.

AVS double-checks the house number and zip code against the issuing bank’s file and CVV ensures the customer has the card on hand.

Keep your payment software updated

The more you neglect upgrading your software, the more vulnerabilities hackers and fraudsters will be able to access. We know it’s a pain, but you need to do it!

Upgrade to EMV

Upgrading to EMV is smart for a whole host of reasons, but chip payments are designed to prevent fraud and abuse, and you’ll always lose chargeback cases if you haven’t upgraded yet.

Upgrading used to be a pain, but custom POS integrations that eliminate the need to switch systems exist now, and they are fantastic.

The bottom line

Credit card fraud is all too common and no business is immune to it. However, some businesses — especially those selling high-ticket items — are especially susceptible.

That said, there's a lot you can do as a merchant to spot red flags for credit card fraud, and prevent (or at least limit) it from happening.

One of the best things you can do to protect your business from fraud is to partner with a merchant service provider with cutting-edge technology, honest pricing, and award-winning support.

Ready to protect your business?

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