How can merchants reduce external fraud?
Merchants should work with their bank to train their sales force to recognize external fraud. They take the orders, make the quotes, orchestrate the shipments and deal with a client from start to finish. The bank’s fraud expert will focus the most attention on them and explain the fraud terms they will see. Almost 99 percent of the time, a fraudulent transaction will have one if not many red flags.
What are some red flags that could be signals of fraud?
An immediate red flag is getting an e-mail out of the blue from someone with broken English asking if you can quickly ship outside the U.S. They always want you to hurry. And it will always be a larger order than the client is used to.
Salespeople, especially if they are on commission, will think it’s a great deal. They will unwittingly comply. When it comes time for payment, another red flag is when you’re given multiple credit cards.
A legitimate customer is not going to have 17 VISA cards in their wallet, all issued from the same institution. These criminals have purchased a block of card numbers on the black market. Typically, the first eight to 10 numbers will be identical. Only the last few will vary. You’ll know this is the same issuer because the first series of numbers tells who the bank is. No one person is going to have that many cards. No bank is going to issue that many cards to one individual or entity.
An initial credit card decline is another important red flag. If the customer presents multiple cards and asks you to split the transaction evenly among those cards -— that’s another red flag. What they are trying to do is keep each transaction low enough to evade the issuer’s fraud monitoring system. So, if the total order is $10,000 and they want to run $2,000 on each card, they are trying to keep that transaction under the radar. Their goal is to get those cards billed and receive the shipment of product before the cards are blocked and shut down.
