Angie Mansfield

Freelance blogger Angie Mansfield covers a variety of subjects for small business owners, including management, marketing, and social media.

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Making It Your Business to Avoid Credit Card Fraud

Angie Mansfield

January 08, 2014

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According to a 2012 report by Javelin Strategy & Research, credit card fraud increased by a whopping 87% between 2010 and 2012, costing American businesses more than $6 billion.

As a business that accepts credit cards, odds are that you'll experience credit card fraud at some point. But there are some things you can do to protect your company from huge losses.

Review PCI Compliance Rules

By law, you must be Payment Card Industry (PCI)-compliant if you accept credit or debit cards. Even if it weren't the law, PCI compliance helps protect you against security breaches.

Your payment processing software should be Payment Application Data Security Standard-certified, and its security needs to be kept up-to-date. Look for PCI certification when you're choosing a payment processor.

Don't Store Credit Card Numbers

This rule is part of your PCI compliance, but it bears repeating. When you're choosing your payment processor, look for one that does not store credit card information on your business software, and doesn't require you to store that information in your records.

Instead, the processor should store that information in the cloud, protected by robust security software. You'll then use an encrypted identification code to process future transactions for that customer, without ever having to handle his or her credit card information.

Ask for Identification

Sometimes, the simplest protection is the best. By requiring a photo ID for credit card transactions, you can put a serious dent in fraudulent purchases.

Make sure the names match on the ID and credit card. If the customer refuses to show you ID, or claims to have forgotten it, it's better to refuse the transaction than risk letting that merchandise leave your store.

Encrypt All Sensitive Information

End-to-end encryption protects sensitive financial data from your payment capture device, all the way to the transaction authorization at the other end of the line. Installing end-to-end encryption prevents data from being captured electronically -- and it also reduces your associated costs for getting your PCI certification.

You'll have to make sure your mobile payment devices; credit card machines, online payment portal, and software all have built-in encryption to protect customer information.

Keep Excellent Records

Even with the best security software and the most security-conscious payment processor, fraudsters can still find a way to get ahold of sensitive information. In case of a breach, you'll have to have detailed credit card sales records to refer to, so you can figure out where and when the breach occurred.

Good accounting and invoicing software can help you with your record keeping. If you do find a breach, contact the police right away. Your second call should be to the affected customers' card issuing banks, asking them to make courtesy calls to the customers.

Credit card fraud is a major source of headaches for small businesses.

But by taking precautions and acting quickly after a breach, you can help minimize your risk.


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