Limiting Exposure to
Fraudulent Transactions &
What to do if you suspect
fraud
Facilitator: Janiere Frank
Fraud & Compliance Analyst
June 16, 2011.
Legal Disclosure
These materials are provided for informational purposes only and should not be relied upon for
marketing, legal, regulatory or other advice. You should independently evaluate all content and
recommendations in light of your specific business needs, operations and policies as well as any
applicable laws and regulations. Caribbean Credit Card Corporation Ltd. is not responsible for your
use of these materials, including errors of any kind, or any assumptions or conclusions you might
draw from their use.
Use of the following information is the sole and exclusive responsibility of the user.
Enjoy the Benefits of the
Card System
 Increased Sales & Customer Satisfaction
 Consumers spend more when they’re not constrained
by cash on hand.
 Speed of Checkout
 No more counting change, return checks.
 Improved Efficiency
 Can save you time and money by minimizing cash
handling and payment reconciliation
 Currency Conversion (except Local & US)
 Settlement is in the currency of your goods regardless
of where the cardholder is from.
Limiting Exposure to
Fraudulent Transactions
AGENDA
Identifying the
High Risk Factors
The Merchant
Agreement
Card Acceptance
Procedures*
How to Minimize
Copy Request
How to Prevent a
Fraud Prevention
Best Practices
Potential Chargeback
Transaction
High Risk Factors
 Counterfeit Cards
 Cardholders are not the only ones affected by Identity
Theft
 Hackers
 Internal & External
 Dishonest Customers
 Goods not received
 Goods defective
 Service not provided
 Dishonest Employees
 Obtain cardholder information for personal use at home
Merchant Agreement
 Merchant shall only use Sales Vouchers in the form
supplied or approved by the Bank.
 Merchant must operate under the agreed Merchant
Category Code (MCC)
 Prohibited from disbursing funds in the form of cash
Merchant Agreement
 Merchant will NOT charge any fee for accepting
payment by the Qualified Card
 All goods and services shall be supplied at the same
price and rates at which they are offered to other
customers of the Merchant
Merchant Agreement
 The Merchant is prohibited from
 accepting a card to collect or refinance an existing debt
 processing a transaction for collection of a dishonored
check
 submitting sales draft on behalf of another merchant
Minimize Copy Request
Copy Request is a request by the Cardholder
to the Merchant for a copy of the actual Transaction
Receipt.
Reasons for Copy Request
 Satisfy a cardholder inquiry
 Transaction Information Document (TID) needed for
cardholder’s personal records expense reporting
 Substantiate a Potential Chargeback or Fraud Report
 Cardholder Does Not Recognize Transaction
 Support legal or fraud investigation
How to Minimize Copy Request
 Make sure your Business Name is legible on
receipts
 Change point-of-sale printer
cartridge routinely
 Change point of sale printer paper
when color streak first appears
 Handle carbon paper carefully
How to Minimize Copy Request
 Make sure Customers can recognize your Name on
their bills
 Train your employees to review sales drafts for
accuracy and completeness
 Make sure the customer signs the sales draft & is
given their customer’s copy
Merchants who keep copy request to a minimum
are more likely to have lower Chargeback rates.
CHARGEBACK
A Transaction that a Cardholder
returns to the Merchant
Chargeback Reasons
 Common Merchant Errors
 Transaction Amount Differ
 Card Not Valid or Expired
 Credit Not Processed
 Late Presentment
 Duplicate Processing
Transaction Amount Differ
 Verify that Invoice & card receipt matches or
reconciles
 Ensure that the cardholder signs the Hotel or Rental
loss, theft, damage agreement which states that the
cardholder is responsible for additional charges
Card Not Valid or Expired
 Take extra care to write the card number
correctly on the manual sales draft
 Once the card is present it should be swiped /
imprinted as merchant opens himself to chargebacks
(especially MasterCard)
 Verify Card Features & Card Expiry date
 Eg. Pay special attention to Hotel guest whose check
out date is near the end or beginning of the month
 A card should not be used before the VALID
FROM date
Credit Not Processed
 Deposit credit receipts with your Bank as quickly as
possible, preferably the same day as the credit
transaction is generated
 At time of transaction, disclose to the cardholder
any policy regarding returns, refunds or service
cancellation
 To avoid currency conversion issues, Do Not
process refunds on the POS terminals. Instead
forward reversal request to your Bank
Late Presentment
 Submit all manual receipts to the Bank the same day of
the transaction
 Merchants have 30 days from the transaction date to
submit all manual receipts
 Fax or email copy of manual
receipts
Duplicate Processing
Duplicate Processing is one of the top three (3)
merchant chargeback codes
 Provide proof of two separate transactions /
Provide proof of PIN present at ATMs
 Wait for POS terminal response before attempting to
process the transaction a second time.
 Ask Manual Authorization Representative to verify
that attempt at POS terminal was unsuccessful / not
authorized.
Duplicate Processing
 Reconcile account daily
 Manual authorization should not be added into the POS
end of day net amount
 Reverse all invalid transactions immediately
 Ensure that transactions are entered into POS
terminal only once and deposited only once
 Make only one imprint of the card for each
transaction
 VOID & Discard any invalid receipts
Chargeback Reasons
 Top Merchant Chargebacks
 Requested Transaction Data not received
 Service not provided / goods not received (defective not
as described)
 Transaction Not Recognized / No Authorization
 Fraud: Card Present / Absent Environment
Requested Transaction Data
Not Received
 Respond to ALL copy requests within 30 days from
copy request date.
 If copy can not be retrieved, request that a credit
be processed to the cardholder’s account (c/back
exchange rate)
 Copy Request retrieved information should be
accurate and legible
Service Not Provided/ Goods
Not Received
 If a customer request cancellation of a Recurring
Transaction, always respond to the request and
cancel immediately
 Ship merchandise before depositing transaction.
 Process a Name and Address verification before
shipment of goods or for services with high values
Service Not Provided/ Goods
Not Received
 ATM merchants must provide proof that cash was
dispensed
 Inform cardholder of Hotel/ Motel “No Show” policy
charge
 Provide proof of product or service delivery
 Obtain from the delivery service company
document with the name and signature
of person that collected the item at the
shipping address.
Service Not Provided/ Goods
Not Received
 Provide Cardholder with our Customer service contact
information
 Test Electronic or Battery operating items before
processing transaction
 Ensure charges are not processed if Cardholder paid by
other means (cash/check)
Transaction not Recognized
No authorization
 Seek Authorization for all transactions
 Hotel should authorize transaction at check-in point
 Do not complete a transaction if the authorization
request was declined
 If you receive a “Call” message in response to an
authorization request, call your authorization
center
Transaction not Recognize
No authorization
 Ensure that the Doing Business As merchant name
and Address is legible on cardholder’s receipt and
matches the name on the cardholder statement
 Verify all Card Security features and cardholder
identification
 At time of transaction, disclose to the cardholder
any policy additional service charges, regarding
theft, damages or early check out
Fraud Card Present / Absent
Environment
 Provide proof of card presence and obtain
cardholder signature
 Verify cardholder identification and cardholder
authorization to use the card to settle the account
 Copy of card and Photo ID
 Name and Address Verification check
 Seek Authorization for all transactions
Fraud Report Reasons
Lost &
Stolen
Counterfeit
Card
Card Not
Present
Fraud Prevention Best Practices
 Lost and Stolen fraud types can be prevented at the
point of sale terminals.
 Compare signatures on receipt and card
 Compare name with valid photo ID
Fraud Prevention
Best Practices
 Card Not Present fraud can be prevented at the
point of name and address verification check.
 Verify Name, Address and telephone number
 Seek copy of card and valid photo ID before processing
shipment of goods
 Cardholder Identification System (e-commerce
merchants)
Fraud Prevention
Best Practices
 Counterfeit Card fraud can be prevented by checking
the card security features.
 Name on card matches name on receipt
 The four digit BIN number matches the first four embossed
number on the card
 Verify valid Visa or MasterCard logo
 In suspicious situations call your card
center for a Code 10 Authorization
CONCLUSION
There is an increasing shift of payment from paper
to plastic. Fraud can be Prevented at the Point
Of Sale Terminals
 Limit Exposure to Fraud by:
Adhering to your Merchant Agreement
Following ALL card Acceptance Procedures
Checking For ALL Valid Card Security Features
Ensuring that your Business Name on the Cardholder
Billing Statement and Receipts are the Same
 Avoiding Common Merchant Errors that can lead to
potential Chargebacks
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Code 10 Authorization
CODE 10
 WHAT DOES CODE 10 MEAN?
Code 10 is the term used by merchants
when they call an authorization centre to
let the centre know that they are suspicious
of a card, cardholder, or a specific
transaction.
BE SUSPICIOUS OF:
 A card that appears to be altered or counterfeit
 A card number that does not match the number
shown on your magnetic card reader or electronic
point-of-sale terminal.
SUSPICIOUS BEHAVIOUR
CARD PRESENT ENVIRONMENT
 Random purchases without regard for size, style,

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


color or price
Refusing free delivery on large items or high-dollar
purchases
Attempts to rush or distract sales clerk during
transaction
Purchases, leave store, then returns to purchase
more
Large purchases when store opens or just before it
closes
Ask for cash back with a credit card
SUSPICIOUS BEHAVIOUR
NON-CARD PRESENT ENVIRONMENT

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
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Rush Orders
Suspicious shipping addresses
Orders consisting of several of the same item
Made with multiple cards but shipped to a single
address
Multiple transaction on one card over a short period of
time
Multiple shipping addresses
If the cardholder is present and offers the card
number but is not in possession of the card*
CAUTION!
 A cardholder may have a good reason
for behaving “strangely” so
remember to be polite and think
rationally.
WHAT TO DO IF YOU ARE
SUSPICIOUS
1.
2.
3.
4.
5.
Do not panic!
Hold on to the card.
Call the authorization centre and say, “I have a
code 10 authorization request.”
Your authorization centre will connect you to the
issuing centre
If the operator instructs, pick up the card but
only if it is safe to do so.
Questions and Comments
Thank You
for your time and
attention 