This month we will be looking at fraud from both the cardholder and merchant perspective in order to shed some light on what you can do to protect yourself. The information compiled below is in line with industry accepted standards and applies to all merchants and cardholders regardless of their supplier.
What is the difference between Fraud and a Chargeback?
Chargebacks arise when cardholders dispute a transaction. This could be due to any of the following reasons: they do not recognise the transaction or merchant name on their bank statement and therefore think that fraud has taken place on their card, they did not receive their goods/service, they were not satisfied with their purchase and feel that the merchant is not handling the refund correctly, they received multiple charges for the same transaction or an incorrect transaction amount was processed.
This could mean that you will have to carry the financial loss of the chargeback unless you can prove that the transaction is valid and was authorised by the real cardholder, the goods were delivered in good order, the cardholder consented to several purchases / amounts being processed etc. Even if you have a valid voucher to challenge the dispute, a dispute can become a chargeback for the following reasons:
- if the bank sees the voucher as invalid,
- the bank sides with the cardholder for any reason whatsoever
- or the voucher is not received in time.
Unfortunately the above reasons can ultimately cause you to lose the funds of the transaction that was disputed.
Fraud on the other hand is a crime and occurs when the transaction was concluded without the cardholder’s consent. For example in the case of cloned bank cards. Merchants that receive excessive amounts of fraud are investigated and may have their merchant facility revoked regardless of who their merchant service provider is as they carry too high a risk for the institution supporting them.
How to Prevent Fraud as a Merchant:
By being vigilant and making use of the tips below, your business can discourage fraudsters from trying to target you!
How will you know that you are being targeted?
In some cases, spotting a potential fraudster is easy. Here is what you should look out for:
- Damaged Chips / Signature Based Cards – A damaged chip could be a sign that someone is intentionally trying to bypass having to enter a PIN by processing the transaction through the magnetic strip or manually. Signature based cards also do not request a PIN if the magnetic strip is swiped through the device and are usually only found on foreign cards nowadays. Protect yourself and try to reduce non pin-based transactions as much as possible as the PIN does add a lot of security to your transaction.
- Suspicious Behaviour – Training your staff on how to spot suspicious behavior patterns can reduce your risk dramatically. The three big NO NO’s to watch out for are when customers:
- Try to purchase an unusual combination of items or items of a higher value than your usual sales.
- Do not know their card limits and tries reducing their spend until the transaction is successful.
- Tries to rush your usual sales / delivery process to get a higher priced item quickly.
- Makes the sale and then wants to get a cash refund shortly afterwards.
- Processes lots of transactions on the same card / splits transactions.
- Foreign Cards – Card skimming and cloning is no myth! If the card looks suspicious or the cardholder’s surname doesn’t appear to match the person in front of you, beware and rather ask for the customer to identify themselves or pay by cash or EFT. If you don’t regularly trade with foreign cardholders you should look out for the suspicious behavior patterns mentioned in the previous point.
- Card Not Present Fraud – CNP Fraud has increased the most of any types of fraud in the last few years. It is crucial that you minimise any form of manual transactions or online transactions that are not 3D secure or PIN based.
Source: SABRIC Fraud Report 2016
Does My Merchant Service Provider Protect Me?
The answer depends completely on the situation. Banks are process driven and therefore Merchants often get treated like a number in this regard. If the dispute voucher is not received in time, the cardholder states that they want to be refunded and the merchant refuses, the cardholder says he didn’t receive the goods, the voucher is invalid / faded etc, then the bank will often disregard the merchant and provide the cardholder with a refund. WAPPoint on the other educates their merchants on how to correctly fight disputes in order to minimise losses and handles the fight with the bank on your behalf!
What Can WAPPoint Do To Protect My Business?
- Our merchants can choose their business name to appear on cardholder receipts. This prevents any confusion if your trading name differs from your registered business name.
- Our card terminals are all PCI Compliant and updates are done regularly to ensure that the latest “Hot Card” files are downloaded. This prevents cards that have been reported as stolen from being approved.
- We advise merchants to not only keep the voucher but any supporting documents i.e. delivery notes, signed quotes, invoices or anything that can prove to the bank that the cardholder received their goods and consented to the transaction.
- On certain transactions, we take extra precaution to contact the cardholder and confirm their purchase. This is to ensure that a call recording can be made available to fight a dispute if necessary.
- We do everything in our power to reach our merchants when a dispute occurs so that you don’t miss the deadline to submit the voucher. Banks often only allow merchants 5-7 days to submit a voucher and only send a fax or email which you might miss if you are not near your computer for a few days.
- We pride ourselves on the fact that we have 17 years industry experience and stringent fraud prevention measures to help fight crime in South Africa! Take a moment to consider what your service provider is doing for you and if it may be in your business’ best interest to switch to WAPPoint.
How Can Cardholders Prevent Fraud?
Your customers, the real ones, want as little to do with potential fraud as you do. By sharing these tips with them, they can protect themselves more and minimise their own risk:
- Review your bank statements regularly and query strange transactions immediately.
- Do not send e-mails that quote your card number and expiry date.
- Never write down your PIN or disclose it to anyone.
- Report lost and stolen cards immediately.
- Never let your card out of your sight when making payments.
- Sign your card on the signature panel as soon as you receive it to stop anyone else from taking ownership or trying to use it.
- Always check transaction slips for correct totals before you sign them.
- Save your Bank’s Call Centre number on your phone.
- Subscribe to your Bank’s SMS notification services.
What Should I Do If I Suspect Fraud?
Regardless of whether you are a merchant or a cardholder, you need to keep this info handy. If you see anything suspicious that could be related to fraud, please inform the relevant parties below:
- Phishing Scams – This is when you get an email or sms requesting your info to get something in return. Please contact your service provider by email as shown below:
Each service provider has their own abuse platform and can be found by calling them directly.
- ATM Fraud or Stolen/Skimmed Cards
- FNB – 0800 110 132
- ABSA – 0800 111 155
- AFRICAN BANK – 0861 000 555
- ALBARAKA BANK – 0860 225 786
- BANK OF ATHENS – 011 833 2117
- BIDVEST BANK – 0860 111 177
- CAPITEC BANK – 0860 102 043
- INVESTEC BANK – 011 286 9663
- MERCANTILE BANK – 0860 119 925
- NEDBANK – 0800 110 929
- STANDARD BANK – 0800 020 600
- SA POST OFFICE (POST BANK) – 0800 535 455
- UBANK – 0860 008 322
- Businesses Being Targeted
- Contact your merchant service provider immediately.
- Contact the SAPS immediately.
- Get CCTV identification of the suspects.
With WAPPoint businesses can rest assured that they have chosen a merchant service provider who cares about them and will do their utmost to protect them against fraud. Get a comparative quote today and see for yourself why we are leading the way in the card payments industry!