Each year, fraud costs businesses millions of dollars. This includes:
- Credit card fraud; (Counterfeit cards, lost or stolen cards, fraudulent telephone or Internet transactions, deferred payments)
- Debit card fraud;
- Cheque fraud.
The losses easily climb. We could prevent them with a little care and a good layout
of the premises.
Credit card fraud
COUNTERFEIT CARDS, LOST OR STOLEN CARDS
In 2003, there were more than 50 million credit cards in circulation in Canada.
The sales volume exceeded 154 billion dollars!
Counterfeiters are mastering technologies which have become less and less costly
and more and more perfected. They can now decode and alter information on magnetic
strips. They copy information to counterfeit cards which they have produced.
When you add cards which are lost or stolen to this, they represent almost 25%
of the losses resulting from credit card fraud.
The recommendations which follow will help you to prevent credit card fraud
and avoid insurance claims. They will also help you maintain the ability to
offer your clients the opportunity to pay by credit card.
Develop the habit of retaining the card until the transaction is completed!
1. Examine the card. Is the numerical impression clean? Are
they properly aligned, of the same size and style? Have the signature area or
the magnetic strip been altered or modified? When you run your fingers across
it, does the hologram seem to be well impregnated into the card?
2. Verify the buyer's identity. Remember that only the
individual whose name is in raised print on the card is authorized to use it.
Compare this name with that of the client, by means of some proof of identification.
3. Validate the credit and the card. After entering the amount
of the transaction, slide the card through the reader. This step will inform
you if the card has been stolen. Next, compare the name and the numbers imprinted
on the invoice with those on the card.
4. Verify the expiry date. Never accept a card with an expired
5. Approve the signature. Carefully compare the signature which
the client has just entered on the invoice with that on the card. If you have
any doubts, ask him to show at least two pieces of identification, including
one with his photo and signature.
6. Always take an imprint of the card during manual operations.
If you still have doubts as to the identity of the purchaser, even after having
received authorization from the centre:
1. End the transaction;
2. Retain the card, if possible.
Do not place yourself in danger. If the individual insists on having the card
back, give it to him. If he leaves, do not follow him.
Call the police.
Be especially watchful of a customer who:
- shops alone or with unruly individuals who distract your attention;
- easily and quickly takes out his credit card;
- purchases the same article several times;
- buys quickly, even an expensive product, without concern about the guarantee,
quality or price;
- insists on leaving with a cumbersome product himself (furniture, electrical
home appliances, etc.) even if delivery is free;
- makes a first purchase, leaves the store, then comes back again;
- asks to split the purchase amount over several cards;
- makes several small purchases to remain under the credit limit;
- pretends to have forgotten his photo identification papers;
- appears too young to hold a credit card;
- signs the invoice slowly or awkwardly.
AUTHORIZATION AND CODE 10
When you mention this code to the employee at the authorization centre, it
allows you to inform them, without alerting the customer, that you suspect a
fraudulent transaction. They will ask you questions to which you have only to
answer "yes or no".
FRAUDULENT TRANSACTIONS BY TELEPHONE OR INTERNET
Nearly 15% of losses related to credit cards originate from transactions where
you do not have the card on hand. Orders by telephone or Internet fall under
in this category.
- Obtain the necessary information to identify the purchaser: family name,
given name, date of birth, complete address.
- Request telephone numbers where the individual may be reached days and evenings
and verify their validity at www.canada411.ca.
- Obtain the card number, the name of the cardholder and the name of the
- Be wary of large orders and requests for speedy delivery (possibility of
stolen card or temporary address).
- Be particularly careful of purchases from abroad or made by irregular customers.
Consult your list of clients.
- Be wary of purchases paid with several cards from the same address or several
small purchases with the same card.
- Consult a business that specializes in control and certification services
for payment by Internet. They will help you find the system which best suits
This service enables the customer to pay only the taxes on the purchase. Under
contract, he undertakes to settle the balance of the invoice later at an agreed
upon date. Be careful! If the merchant accepts a fraudulent card, he loses his
merchandise. Even the invoiced taxes will not be reimbursed.
- In the case of a deferred payment, always obtain a credit check from a firm
specializing in this service.
- Wait until you have received the results of the credit check before allowing
a customer to take possession of your merchandise.
Top of the page
Debit card fraud
Certain fraud artists observe consumers when they enter their personal identification
number (PIN) during a withdrawal or payment. Others even modify the card reader
in order to record the information included on the magnetic strip.
Three elements to be observed during debit card transactions:
Adopt the good habit of retaining the card until the transaction is completed!
1. The card
- Quickly glance to see if the card appears real: clean numbers, well aligned,
of the same size and style, smooth and intact magnetic strip.
2. The PIN
- Ensure that your customers may enter their PIN shielded from inquisitive
3. The card reader
- Regularly ensure that your card reader has not been tampered with.
- Never hesitate to inform your service provider of abnormalities or suspicious
Top of the page
Establish a procedure for payment by cheque and assure yourself that your employees
respect it. Do not appoint more than two individuals responsible for authorizing
PROCEDURE FOR ACCEPTING A CHEQUE
- Verify the identity of the person by means of two identification cards,
including one with a photo.
- Have the cheque signed or endorsed in your presence.
- Compare the signature on the cheque with those on the identification cards.
If in doubt, do not accept the cheque.
- Ensure that the cheques are intact and unaltered.
- Verify that the details on the cheque are accurate.
- Never approve a cheque where the amount exceeds that of the purchase.
- Write the invoice number on the back of the cheque.
- Never automatically accept company cheques. Despite their "official"
appearance, they can be counterfeit.
- Be cautious with customers who attempt to negotiate a second cheque after
an earlier authorization.
- Be wary of customers who appear too young to have a bank account and to
be cashing cheques.
Top of the page
You can put a stop to shoplifting by following these few suggestions.
Store layout: Low counters, wide aisles, good lighting and
mirrors will help you to properly see what is happening in your establishment.
Place the cash register at the entrance and greet the customers. Ensure that
the interior of your business is visible from the street.
Memorize your prices: If someone has changed a tag, you will
know right away.
Watch individuals who are eating in the store: (ex.: candies,
drinks). They may leave without paying.
Pay attention to vandals: Certain individuals deliberately
damage packaging or a product to claim a discount.
Protect articles of value: Place them in locked display cases.
Remove only one article at a time. Lock the display case every time you remove
or replace an article.
Control the fitting room: Limit the number of garments being
tried at one time. Ensure that the room is empty when a customer leaves.
Verify the merchandise at the cash register: Ensure that the
number of articles in the package corresponds with the indicated price.
Do not allow yourself to be distracted: A customer may draw
you to a corner of the store while his accomplice, left unattended, steals your
Complicate life for thieves: Set up displays which are rigged
with empty packaging or with partial articles only. Fasten hangers on which
valuable clothing are displayed to counters or alternate the direction you place
them. Put bargain products and cumbersome products which are difficult to steal
at the rear of the store. Place your most expensive products far from doors
and windows, atop shelving. Affix security labels to your products. Request
that your customers leave their bags at the entrance.
Install a good video surveillance system: Monitors, which
are in plain sight, dissuade thieves. See to it that the cameras record not
only all the comings and goings but also all transactions at the cash register.
Adopt a zero tolerance policy: Never let a theft go unpunished.
Inform on thieves.
Top of the page
The power to put someone under arrest
The criminal code states that you have the power to arrest a person caught red-handed
. Therefore, you have to have seen
- take the merchandise;
- hide it and;
- leave the store with it.
Use force only when necessary and make sure you are safe.
When putting someone under arrest:
- ask for assistance from an employee and make sure you are safe;
- identify yourself;
- explain to the person the grounds for the arrest;
- inform the person of his rights to an attorney;
- call the police;
- do not touch or move stolen goods;
- police officers will collect and take care of the evidence.