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Best Practices For Reducing Fraud And Catching Common Scams

Best Practices For Reducing Fraud And Catching Common Scams

The holiday season is almost upon us. And, all too often, merchants may see a spike in credit card fraud during the holidays.

In the United States, data breaches are a serious and lingering problem. In fact, 72% of data breaches happen in North America and some of the largest breaches in recent years have happened in the United States:

  • 145 million eBay records were compromised
  • 83 million JPMorgan Chase records were compromised
  • 109 million Home Depot records were compromised
  • 650,000 Domino’s Pizza records were compromised

It’s typical that fraudulent transactions and data breaches increase during the holiday season. 40% of each year’s online credit card fraud occurs during the months of October, November, and December.

Data breaches can affect any merchant, putting them at risk of damaging their brand and endangering their customers’ financial details. But merchants can implement payment security technologies and industry best practices to help reduce their risk of being breached, especially during the busy shopping season.

Here Are 7 Best Practices For Protecting Your Business

  1. For card-present scenarios: Ensure point-of-sale (POS) terminals are EMV compliant to protect against chargebacks.
  2. For card-present scenarios: Train employees on how to spot suspicious credit cards.
  3. For card-present scenarios: Encourage employees to ask customers for identification.
  4. For card-not-present (CNP) scenarios: Look for multiple transactions from one card in a short period of time.
  5. For CNP scenarios: Require the CVV2 number to complete a transaction.
  6. For CNP scenarios: Monitor orders from multiple cards being made from one IP address.

And For Consumers, Here Are The Most Common Scams To Look Out For

Gift Card Scams
Gift cards are incredibly popular during the holiday season, which has made them a very popular target for fraudsters, especially because many retailer gift cards don’t have layered security.

Most gift cards have a magnetic stripe on the back, similar to a non-EMV credit card. Fraudsters can access the card’s digital information by swiping unpurchased gift cards in the store with a magnetic scanner. Once a card has been activated by an unsuspecting consumer, the fraudsters can begin emptying the card of all its funds. Most of the time, consumers don’t realize what has happened.

Fraudsters also use the high demand for gift cards to their advantage with email scams, telling consumers that they can purchase discounted gift cards if they reply to the email with their credit card details.

Delivery Scams
Delivery scams catch many unsuspecting victims off guard, and are primarily executed via email. This specific scam is successful because consumers expect to receive gifts in the mail during the holiday season.

Fraudsters send an email, saying that a consumer needs to follow a link to receive a package that was not able to be delivered by a courier. These emails often appear to be from shipping companies like FedEx and UPS, so it doesn’t raise red flags for many consumers expecting packages. These emails usually include a link that, when clicked, introduces malware into the device to steal financial and personal information.

Look out for suspicious emails, pay careful attention to the sender’s email address, and do not click on any links if the email doesn’t appear legitimate.

Loan Scams
Some consumers can find themselves short on cash during the holiday season and this may make them victims for fraudsters using fake loan applications to steal data.

Fraudsters will email consumers claiming to be representatives of a bank and offering applications for short-term loans. If a consumer clicks the link to apply for the loan, they are taken to a legitimate-looking website and prompted for their personal details and credit card information. Submitting the form provides this information directly to fraudsters. Sometimes, the fraudsters will follow up by phone to get an upfront loan payment.

Be wary of emails that appear to be from banks, and be sure to verify that the bank website is legitimate when submitting personal information (e.g., the domain name is not misspelled).

By following these best practices and being vigilant, both merchants and consumers can avoid becoming victims of fraud this holiday season. To learn more about payment security solutions that can protect consumers and your business, contact us at or give us a call at 800.396.0246.

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