Business Briefs - Fraud Control

The links on this page contain more detailed descriptions of specific types of fraud and what you can do to avoid them. However, there are several basic steps you can take to identify fraudulent activity and perhaps save your company thousands of dollars just by being vigilant.

First, train your employees in the basics. Once is not enough, so train new and veteran employees on a regular basis to reinforce the following basics:

• Take the time to look at the card. Counterfeit cards and the people who present them sometimes just don't "look right". Learn to trust your instincts.
• Verify the signature on the back of the card with that on the sales receipt. An unsigned card is considered invalid and should not be accepted. If a customer gives you an unsigned card, the following steps should be taken:
  • Where permissible by law, request a photo ID. The ID serial number and expiration date should be written on the sales receipt before you complete the transaction. Note: In most cases, a merchant may not ask for an ID as part of their regular card acceptance procedures, either when a valid card is first presented or to complete a sale. Laws in several states also make it illegal for merchants to write a cardholder’s personal information, such as an address or phone number, on a sales receipt.
  • Ask the customer to sign the card. The signature on the card should match the signature on the photo ID. A refusal to sign means the card is still invalid and cannot be accepted. Ask the customer for another signed Visa card.
  • Compare the signature on the card to the signature on the ID.
  If a cardholder refuses to sign the card and you accept the card, you may end up liable for the transaction should the cardholder dispute the item.
• Check the account number on the front and back of the card to make sure they match.
• Watch for suspicious behavior such as making large purchases at opening or closing time, not asking any questions regarding major purchases, requests for delivery to foreign countries (particularly Nigeria, Ghana or Indonesia), etc.

If you are suspicious about a transaction or feel you need additional information to ensure the identity of the cardholder make a "Code 10" call to your voice authorization center. When the operator picks up, say, "I have a Code 10 authorization request". An operator will tell you what to do.

• Try to remain calm so as to not alarm the person who presented the card.
• Keep the card in question in your hand.
• Answer the operator's questions with a simple " yes" or "no".
• Follow the operator's instructions. Do not, under any circumstances, confront or try to apprehend the customer.

The most important thing is that you and your employees are safe and that your business is protected.

For more information on fraud control, you may also call
Heartland's Loss Prevention group at 888-798-3133 ext 1620.
Hours of operation are:
Monday – Friday 6 a.m. – 6 p.m. & Saturday - Sunday 7 a.m. - 6 p.m. (Eastern)

Counterfeiting a credit card is the process by which someone takes an existing card and/or a cardholder's account information and creates a fake credit card. Several years ago, counterfeit credit cards were somewhat easy to identify. This is no longer the case.

Counterfeiters have become very adept at creating credit cards that appear to be legitimate at first glance. A good counterfeit will have the cardholder name, card number, expiration date and possibly card issuer emblem embossed on the card. A good counterfeit will also have a magnetic stripe on the back of the card that is readable and contains cardholder information that is transmitted to the issuer. In some instances, the stripe is unreadable. More than likely in those instances, a merchant will simply assume that the stripe is unreadable and that the transaction needs to be hand-keyed.

Steps you can take to guard against counterfeit credit card fraud

Each major credit card brand will have unique features located on their branded cards. A merchant should become familiar with those features and readily be able to look for and recognize the identifying factors. The unique card features for each major credit card are listed below:

Visa Features

• All Visa numbers start with a 4. The embossed card number should be clear and uniform in size and extend into the hologram. The embossed card number should match the card number printed on the customer receipt and match the card number displayed on the terminal window (if the POS terminal allows).
• The 4 digit number printed below the embossed card number must match the first four numbers of the embossed card number.
• Current Visa cards have an embossed V to the right of the expiration date.
• The back of the card must be signed.
• A Visa card has a three dimensional dove hologram that should reflect light and change as it rotates. (This will eventually be phased out).
• All new and re-issued consumer Visa debit cards will have the word "Debit" above the hologram. By January 1, 2007, all Visa debit cards will have this feature.
• The magnetic stripe should appear smooth and straight and show no signs of tampering.
• The signature panel should have a repetitive pattern of the word "Visa" printed in color at an angle. The panel should contain a full or partial account number, plus a three digit Card Verification Value 2 (CVV2) is indexed on the signature panel as the last three digits.

MasterCard Features

• All MasterCard numbers start with a 5. The embossed card number should be clear and uniform in size and extend into the hologram. The embossed card number should match the card number printed on the customer receipt and match the card number displayed on the terminal window (if the POS terminal allows).
• The 4 digit number printed below the embossed card number must match the first four numbers of the embossed card number.
• Current MasterCard cards have an embossed MC to the right of the expiration date.
• The back of the card must be signed.
• A MasterCard card has a three dimensional hologram with interlocking globes that should reflect light and seem to move as you rotate the card. The word "MasterCard" is printed repeatedly in the background of the hologram. The letters "MC" are micro-engraved around the two rings.
• All new and re-issued consumer MasterCard debit cards will have the word "Debit" above the hologram. By January 1, 2007, all MasterCard debit cards will have this feature.
• The magnetic stripe should appear smooth and straight and show no signs of tampering.
• The signature panel should have a repetitive pattern of the word "MasterCard" printed in multiple colors at an angle. The panel should contain a full or partial account number, plus a three digit Card Verification Value 2 (CVV2) is indexed printed within the signature panel of some newer cards.

American Express

• Embossing should be clear and uniform.
• Portrait of the Centurion is printed with great detail similar to the portraits on U.S. currency.
• Account number on the front of the card must match the number printed on the back of the card.
• The letter "AMEX" and phosphorescence within the Centurion portrait are visible when the card is examined under an ultraviolet light.
• Pre-printed, non-embossed Card Identification Number (CID) should always appear above the account number, on either the right or left edge of the card.

Discover Features

• When the card is held under ultraviolet light, the word "DISCOVER" will appear on the front of all cards.
• All Discover network account numbers begin with 6011. The embossing should be clear and uniform in size and spacing and extend into the hologram.
• The special embossed Security Character appears on the same line as the "Member Since" and "Valid Thru" information. It appears as a stylized "D".
• The "Valid Thru" date indicates the last month in which the card is valid.
• As of September 1, 2004, all new and reissued cards running on the Discover network will display the Discover Network acceptance mark as shown. It appears in the lower right hand corner on both sides of the cards. On older cards, the acceptance mark appears only on the back. The acceptance mark will continue to circulate on pre-existing cards until October 2007.
• The three dimensional hologram should reflect light and appear to move as you rotate the card. Its design shows a celestial sphere made of interlocking rings and an arrow pointer. The word "Discover" appears in very small letters on the shaft of this arrow. The background of the image consists of a repetitive wave pattern with stars scattered throughout.
• The last four digits of the account number appear on the signature panel in reverse indent printing. On all cards, this is followed by the three-digit Card Identification Date (CID). Older cards may include the full 16-digit account number.
• An overprint pattern will be present on the signature panel. If the signature panel is tampered with, the word "VOID" will appear.

Skimming is an illegal process by which criminals obtain credit card account information to produce counterfeit cards and to fraudulently use cardholder account information. Typically, an individual uses a small device to read and store the information contained within a card's magnetic stripe. Most devices are small and not much bigger than a pager as illustrated below.


The data retrieved from the magnetic stripe are then sold to criminals and in most cases, used to produce counterfeit cards. Criminals then use the counterfeit cards to run up large amounts of purchases over a 2-3 day period and then discard the card. The original customer usually doesn't find out that his card has been compromised until he receives his statement at the end of the month. By that time, the damage has been done and the criminal is very hard to find.

Skimming occurs frequently at restaurants, but skimming devices can be found in virtually any establishment. Restaurant servers and retail clerks may be recruited by criminals to swipe the cards first through the skimming devices and then through the normal terminal. Additionally, criminals have developed techniques whereby they install components within POS terminals, ATMs and pay at the pumps whereby the components read and store cardholder information retrieved from the card's magnetic stripe.

Merchants should be mindful of:

• Employees using small devices that are not part of their day-to-day tasks. Be on the lookout for pagers and laptop computers and other unusual devices brought to work by employees.
• Unscheduled visits by individuals claiming they need to perform checks / updates to your POS terminal.

Suspicious activity should be reported to a company supervisor or company security personnel or to the merchant processing center.

Typically, the fraudster contacts the merchant via e-mail, phone or Telecommunications Devices for the Deaf (TDD/Phone relay). The fraudster purchases a significant amount of product and requests that the product be shipped to an address located in Nigeria, Ghana, or Indonesia.

The fraudster may use several credit cards and purchases large quantities without regard for pricing or shipping costs.

If a merchant is contacted by a potential customer and determines that the customer is contacting them from one of these three countries and / or wants the product shipped to one of these three countries, the merchant should contact Heartland Loss Prevention immediately and not process the sale or ship product until they have spoken with a Heartland Loss Prevention analyst.

It is safe to assume that 99.9999% of transactions having one of the aforementioned characteristics are fraudulent.

For more information on fraud control, call
Heartland's Loss Prevention group at 888-798-3133 ext 1620.
Hours of operation are:
Monday – Friday 6 a.m. – 6 p.m. & Saturday - Sunday 7 a.m. - 6 p.m. (Eastern)