Credit Card Fraud – Protection and Punishment

Credit card fraud is a great menace not only to credit card owners, but to businesses as well.Credit Card Fraud - Why you should be alert.

Its damage is more daunting for online and mail order businesses where credit card details are provided by somebody who may either be a legitimate or bogus customer.

On the other hand, brick-and-mortar stores can reduce the possibility of fraud with the use of credit card swipe machines and the customer being present for the transaction.

However, this does not eradicate the threat of fraud.

Despite the effort of most countries to prevent credit card fraud, perpetrators are still able to steal and cause numerous businesses to lose millions of dollars.

Financial institutions, the government, and concerned private and non-governmental agencies worldwide are doing their share to help protect businesses from any form of fraud.

Protection Against Credit Card Fraud

Credit Card Fraud - Your guide for credit cardsFinancial institutions that issue credit cards provide certain coverage for merchants’ loss.

But, most of the coverage is not enough to cover all losses due to charge backs.

The government also promulgated laws to protect merchants and punish fraudsters.

Fraud security procedures are being employed by card processing service companies.

However, you also must do your own protective measures in order to reduce the incidence of credit card fraud that includes among others:

  • Check out first-time customers with a large amount of ordersA big order placed by a first-time customer that requires an overnight delivery is suspicious.This type of order placement is the usual procedure of credit card thieves and scammers.

    Check out the customer and make sure that the supposedly customer is the actual owner of the credit card used for payment.

  • Inclusion of CVV Number in Order FormsInclude in your Order Forms the requirement for entering the CVV (Card Verification Value) number.CVV number is the code printed on the back of the credit card, which should be stored by your billing software and passed on for verification to the credit card processor.

    This will minimize the incidence of fraud since fraudsters usually only have the numbers of the credit card.

  • Documentation of transaction detailsIt will be a big help in case you get caught in a fraud case if you are able to store information such as IP address, date and time of visit, and details of phone conversation of customers browsing and placing orders in your website.Adding the caller ID and other pertinent data to the order information is also very beneficial.
  • Verification of contact details and use of free email accountsIt is essential that you verify the address and contact numbers of your customers through online directories.Also, be careful of customers using free email accounts because most fraudsters use them.
  • Check if the order form is completeBefore you accept an order, make sure that the order form is complete and all required fields are filled out.Make use of the Address Verification System (AVS) of the card processing service provider for additional protection.
  • Shipping and billing addressesIf a new customer is placing orders with different billing and shipping addresses, make sure you verify the order before shipping out.

Prosecutions and Punishment for Credit Card Fraud

Credit Card Fraud - Your guide for credit cardsCredit card fraud can be a very serious crime.

The US Secret Service is the agency that prosecutes this type of fraud.

Other federal and state agencies may also share jurisdiction on a fraud case.

Felonious card fraud under US law is penalized for up to ten years in jail, and for severe cases, a penalty of up to twenty years in jail.

The courts can order seizure of personal properties used in credit card fraud such as computers, money, and houses.

Credit card fraud can also involve stealing, creating counterfeit cards, sale of fake credit cards, using computers to get people’s bank accounts information, and several more.

The penalties for these crimes will also vary depending on the severity of the offense and the method used to carry out the crime.

The fines are dependent on the factors involved.

In many cases, probation is possible especially if the offense was only minor and the defendant was never convicted before.

However, higher amounts and repeated offenses will result in felony charges and the penalty is more years in prison.