Retailers will be hoping for a much needed sales boost in the run-up to Christmas – and it looks like they’re going to get it. Visa estimated in mid-November that £320 million would be spent on its cards on 3 December alone. This is 21 per cent higher than last year, which is great news, but there is a sting in the tail: one in four (27 per cent) of consumers claim to have been the victim of credit, debit or pre-paid card fraud during the past five years – and this can have a serious impact on consumer behaviour.
In fact, according to the ACI Worldwide Global Fraud Report, fraud is on the increase with 14 per cent of debit and credit card holders having experienced fraud multiple times during the past five years; this is compared to just six per cent in 2011.
After experiencing card fraud, 56 per cent of cardholders use cash or an alternative form of payment instead of a debit or credit card. Furthermore, of cardholders who received replacement cards as a result of a data breach or fraudulent activity in the past year, 46 per cent used the new card less than the original.
Retailers may well feel that this doesn’t impact them as they will get cash payments instead, but it’s actually the retailer that the consumer will blame for fraud . And, if the retailer hasn’t taken the appropriate steps to protect against fraud, they can be liable to cover the cost.
It is therefore vitally important for retailers to be part of the fight against fraud, take appropriate measures and work with issuers and consumers to cut card fraud – and protect against liability. For chip and PIN cards this means abiding by the processes stipulated on the card readers.
However, extra vigilance should be taken when accepting cards that are not chip and PIN – most often cards from outside the UK. This includes looking for valid card schemes and spotting tell-tale signs such as customers trying to distract staff at tills, random and careless purchases, and also whether the title on the card matches the gender of the person presenting it. Another factor that may cause alarm bells to ring, is if the customer buys small-value items but asks for large amounts of cash back.
In addition, retailers should ensure that on MasterCard and Visa cards the printed digits above or below the first four embossed card numbers are the same. On counterfeit cards, these four digits are often missing, or rub off if you run your finger over the digits. On genuine cards, which have been altered for counterfeiting, they appear but the numbers do not match. Staff can also use UV lights to see if they have a watermark on them, which genuine cards should have – just like cash. Meanwhile, staff should always check the number on the card matches the receipt (which will not be the case if the card is skimmed or cloned) and check the signatures match (if not chip and PIN).
If retailers have any suspicions, it is important to retain the card, if safe to do so, and call the bank’s authorisation centre and ask for a Code 10 authorisation. This lets the authorisation centre staff know that the retailer is suspicious of the card or the presenter and that they may not be able to speak freely in front of them.
If retailers take these steps, they can avoid the nightmare of losing customers or ending up seriously out of pocket. The highly organised nature of financial crime and the advancement of a fraudsters’ technological toolkit can badly strike the pockets of consumers and retailers alike. While the banks are doing all they can to introduce new technologies to protect against fraud, retailers need to take precautions and consumers need to be constantly educated about best practices to avoid becoming a victim. As we approach Christmas, let’s hope the increase in spending isn’t mirrored by an increase in fraud.