Criminals target uninformed merchants. Integrate these six proven practices into your policies and you'll protect your business, your customers, and your bottom line.
Fraudsters target the path of least resistance — and that means uninformed merchants whose employees don't know what to look for. Credit card security has advanced significantly with EMV chip technology, and processors continuously monitor transactions for suspicious activity. But technology alone isn't enough.
In-store credit card fraud remains a serious problem for merchants. Employees who aren't trained to detect red flags in the moment create vulnerabilities that criminals actively seek out. When fraudsters find these locations, they treat it like a gold mine.
The solution is straightforward: integrate these six practices into your policies and procedures. Consistent training and clear protocols will secure your point of sale and protect your revenue.
Key Insight: As criminals discover businesses where employees are not trained, they exploit them repeatedly. Training your team once pays dividends indefinitely.
Apply all six of these rules consistently and your business will no longer be easy prey for point of sale fraud.
Rule 01
With credit and debit cards, there are no borrowing privileges — no exceptions. The only authorized user is the cardholder whose name is on the front and signature is on the back. By accepting payment without verifying ID, you could be setting yourself up for a fraudulent chargeback. Simple due diligence that takes seconds can save you time, money, and headaches.
Always verify ID on suspicious transactions
Rule 02
Criminals intentionally deface cards so the stripe can't be read and the chip can't be inserted — bypassing anti-fraud features. If a customer tells you upfront their card won't read, that's a major red flag. Never manually key in information from a damaged card. Ask for another card or cash, or decline the transaction entirely.
Never manually key damaged cards
Rule 03
In 2017, 10.8% of all merchandise returns in the U.S. were fraudulent — from stolen product returns and employee fraud to counterfeit receipts. Criminals know who the weak links are. Your return policy must be crystal clear to both customers and employees. If something doesn't seem right with a return, put on the brakes.
Clear policy = fewer fraudulent returns
Rule 04
Your processor monitors transactions and learns your business's normal payment patterns. If you need to run a transaction that's unusual — like a $2,500 catered wedding deposit when you typically average $50 — call your processor first. Knowing why payment red flags are raised will help you make good judgment calls on legitimate transactions outside your normal patterns.
Call ahead for unusual transactions
Rule 05
Fraudsters often intimidate cashiers to create a distraction — starting a scene, rushing the transaction, complaining about service — anything to keep the employee's attention off the card authorization. Don't let customer bullies have their way. Empower your staff to always follow the correct protocol on every transaction, no matter the pressure.
Distraction = a fraud technique
Rule 06
A Code 10 allows you to call your processor for a verbal authorization without making the customer suspicious. If the processor determines something doesn't add up, they will deny authorization. You can call a Code 10 any time you feel a transaction may not be legitimate — there's no downside to being careful.
Use it any time you have doubtWhen you're at the register, watch for these specific warning signs on every card transaction. If you spot any, don't hesitate — call it in.
Card Won't Swipe or Insert — Especially if the customer tells you this before you even try. Intentional damage is a classic counterfeit card technique.
Missing Bank Identification Number (BIN) — Every legitimate card has a BIN above or below the first four digits. If it's absent, that's a red flag.
Name on Card Doesn't Match Signature — If the printed name and the signature don't align — or the name is misspelled — call a Code 10 immediately.
Card Number Mismatch — The number embossed on the card should match what appears on the terminal. Any discrepancy is an immediate red flag.
Customer Shows Unusual Anxiety or Urgency — Fraudsters often appear nervous, try to rush the transaction, or become agitated when normal verification steps are applied.
A Code 10 is a verbal authorization call to your processor that allows you to flag a suspicious transaction discreetly — without alerting the customer that anything is wrong. You simply call the number on the back of the card terminal or your processor's authorization line and say "I'd like to call in a Code 10 authorization."
The processor will ask you a series of yes/no questions. If they determine the transaction doesn't pass their checks, they will deny the authorization — protecting you from a fraudulent charge without confrontation.
Use a Code 10 any time you have doubts. There is no penalty for being cautious, and it can save your business from a costly loss.
Due diligence is your best defense. Following these six rules will ensure your business isn't an easy target when fraudsters come looking. Have questions? Our team is here to help you set up the right protocols.
