How to: Preventing credit card fraud

How to: Preventing credit card fraud

Logic Group product marketing manager Sarah Goode Figures from ABTA show that £10 million is stolen each year by fraudsters in the travel industry.

This is despite the introduction of chip and PIN, which, although largely successful in improving security of face-to-face transactions, has meant that resourceful fraudsters are more likely to use the ‘card not present’ method when paying for holidays.

Credit card fraud is felt on the bottom line, but it also reduces customer confidence and the integrity of your brand.

Compliance is another issue – mandates are becoming more extensively governed and policed, and the last thing you need in today’s testing business environment is to be saddled with a heavy fine.

Here we offer a few pointers on how to avoid falling foul of credit card fraud.


What to watch out for

Cardholder-not-present fraud and ID theft

Fraudsters listen in on a transaction and note down the card details and phone number.

They call the customer back and pose as a holiday company staff member, say there’s a problem with their card and ask for confirmation of all the passwords and other personal information they would need to create a fake identity and make further purchases.

Tumbling and swapping

This is when fraud gangs use computers to run schemes that work with large amounts of randomly selected 16-digit numbers and constantly swap them with possible expiration dates to produce usable credit card accounts.

This can be counter-acted with specialised pattern detection engines that track unusual card and email addresses and activities.

Cancellation fraud

This occurs when a fraudster makes a booking and then cancels. The fraudster gives a reason, such as a family emergency, and asks for the money to be refunded via a money transfer.

As the card is not present, the merchant is financially liable for the fraud transaction. The original transaction is reversed and the supplier sustains a loss for the amount that was sent. Only refund money on to the card used in the original transaction.

Agent fraud

Travel agent fraud occurs when an overseas ‘supplier’ asks to overcharge a credit card and send the commission to the agent via international money transfer service.

Cardholder present fraud

Although chip and PIN has had a significant effect on reducing face-to-face fraud, vigilance is still necessary.

  • Check that the embossing on a card is even, with all numbers the same size and shape.
  • Ensure the cardholder name is present and does not look like it has been tampered with.
  • Check that the name on the card matches other information provided.

These may seem like simple measures, but too many companies are neglecting to train staff on what to look out for.


Prevent, protect, pursue

Prevent: Implement fraud and risk management programmes and seek expert consultancy. A standard credit card transaction checklist that all staff must use when taking an order is a good place to start.

Protect: Develop and maintain secure customer databases to track buying patterns and identify changes in buying behaviour. For example: look for a common address that has been used by a number of different card numbers.

Pursue: On the occasions where none of the preventative and protective measures have been successful, pursue fraudsters by passing on information to the relevant authorities. Advertise that your business will prosecute identified fraudsters and ensure your anti-fraud policy is displayed on your website.


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