How Do I Prevent Credit Card Fraud?

Many years ago, a banker who was nearing retirement told a young man that one day people wouldn’t write checks or use cash. He told the other man that we would someday live in a paperless society. While this isn’t 100 percent true, even in 2010, a huge number of financial transactions take place every day without the use of cash or check.
How are all these payments made? Why, with a credit card, of course!!

Credit cards are very efficient and very handy. We don’t have to remember to “get some cash” before we head out to make our purchases. We don’t have to write a check. In fact, many merchants won’t take personal checks. But we can almost always use a credit card. So, everything’s great, right?

Not necessarily. Credit card fraud costs businesses billions of dollars every year. The problem usually stems from cards that are stolen or lost, though some creative thieves have produced counterfeit cards that are used until someone catches on. For businesses with a physical location, such as grocery stores and clothing stores, credit card fraud can be a major problem. Now it is also becoming a serious issue for online businesses, as more and more purchases are made with credit cards online.

What can we do to prevent credit card fraud?

The merchant can take a few simple steps to ensure that the person using the card is the owner of the card. When a retail customer starts the payment process with a credit card, the merchant should ask for a photo ID, such as a driver’s license. If the information on this ID matches the card and neither item seems to be altered in some way the transaction should present no problems.

It’s also important to make sure the signature on the back of the card is the same as the signature on the store copy of the receipt. This isn’t a sure way to prevent problems but it can help. If there is not signature on the card or if the signatures obviously don’t match, the merchant should refuse the transaction. It’s also possible to discover problem cards by checking the card presented with a list of stolen or lost cards.

If there is some doubt about the authenticity of the card or the identity of the person using it, the merchant can call the credit card company and take other steps to ensure that the transaction is legitimate. Merchants and customers should make sure that no copies of the transaction are left in locations where someone can find them. This allows the creative thief to make use of the card number and other information.

Individuals should keep their credit cards in a safe location so they can’t be physical removed by a pickpocket, for example. If you have multiple cards, don’t carry all of them with you when you go shopping. Take two cards and your identification and leave the rest at home.

Finally, individuals should carefully review credit card statements to make sure all the transactions are legitimate.