Wednesday, September 2, 2015

Heartland:Credit Card Fraud At Small Business About to Soar

The frequency of counterfeit or stolen credit cards being used at small business is ready to jump, I was told, in an interview with Heartland Payment Systems Chairman and CEO, Robert O. Carr. Credit card fraud migrates to the weakest points, and since the larger retailers and restaurants have (by and large) already installed the needed equipment for the October 1st shift of liability to merchants, those who are unprepared are mainly the small merchants.
Assorted studies in the last few weeks have said that only 25% to 42% of small business owners are properly prepared for the EMV shift.  The number that Heartland provided was 40% readiness among retailers. Another area, according to Carr (and others), that will be subject to a higher level of fraudulent transactions is e-commerce/online sales.    Many online sellers are not using AVS (Address Verification Service) when they accept a shipping address.   These sellers are going to be targeted by thieves.  The benefit of AVS is that it allows the seller to know if the merchandise is being shipped to the billing address of the card holder.  If the card holder is in Iowa, but the merchandise is being shipped to Miami, that ought to raise a red flag.   But, if a seller is not using AVS then it’s an easy way to ship merchandise to a temporary address.  Sometimes crooks will ship merchandise to a neighbors house, who is not home during the day, and then go pick it up from the porch after it has been dropped off by UPS or Fed Ex. Those losses are going to be borne by the seller.  AVS has been around for many years - there is no good excuse not have it implemented. Some areas of the US already experience a high rate of credit card fraud.  On a recent visit to Las Vegas I used my credit or debit card frequently. On every occasion, whether it was for an ice cream cone, or a dinner tab,  I was asked to produce a photo ID when I provided my credit card.  While that might seem extreme, it offers a basic level of protection. If I were a small merchant and not prepared for the EMV shift in October, I’d have a sign in the front window of my business that said  “Due to new regulations, and for our mutual protection, we may ask for a photo ID with a credit card purchase.”   And then I would stick with that until I had upgraded my equipment to comply with the new laws.   During the interview, Bob Carr said to me several times that "merchants have no idea how many counterfeit credit cards they take, and starting in October they will find out.“ (

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