What If I Become A Victim?
To stop credit card fraud, I believe merchants must unite for a common goal and have no mercy for credit card crooks. If you have the misfortune of sending merchandise to a crook, there are a few options available to you to try and recover your merchandise or to see justice done. This is a rather complicated issue for merchants though and you may hit several stumbling blocks along the way.
Be persistent! Try all your options.
The first thing you can do if you become a victim of credit card fraud is call the police to report the crime. Be aware, however, that until you're left holding the tab for the crime, you're not considered the victim, the cardholder is. If you're trying to stay ahead of the game and you're not sure yet who will ultimately be responsible for the lost dollars, you need to contact the cardholder.
Call the cardholder's issuing bank and ask them to do a courtesy call to the cardholder. Mention that you have the address where the product charged to the cardholder's credit card is being shipped. That information will usually entice the cardholder to return your call. Convince the cardholder to report the crime to the police in the town where the crime was committed (where the product was shipped). If that police department has a detective that works on credit card fraud cases, you can at least get the ball rolling to possibly recover the merchandise and/or see justice for the actual crime.
Some police departments will be more helpful than others. Find out the parameters of your state law concerning issues of credit card fraud. In some states, all credit card fraud is considered a felony and the crime is taken more seriously. You may be lucky to find a police department that has a detective dedicated to crimes involving credit card fraud. Such was the case in an incident involving a teenager. Although, I never sent the product, we were still able to get some justice for the crime. And hopefully, he will be one credit card crook who learned his lesson early and won't do it again. In a case like this, you may or may not recover your lost merchandise, but at least you've done your part to help put an end to the crime.
Here in Colorado, as in many states, credit card fraud is considered a misdemeanor unless the actual dollar value of the loss (cost of goods in the merchant's case) reaches $400. From $400 - $15,000 the crime is considered a Class 4 Felony. Above $15,000 the crime is a Class 3 Felony. Admittedly, many police departments simply do not have the manpower to dedicate a detective to misdemeanor crimes and the cases are closed leaving the merchant holding the bill.
If this is the case in your situation, and if you truly feel you did everything you could to verify the cardholder information before shipping the product, then you need to take the issue up with the credit card company when you receive your chargeback notice. Take some time to write out a strong defense for yourself. Include the notes from your conversation with the cardholder's issuing bank. Hopefully, the credit card company will reverse the chargeback and you won't be responsible for the lost dollars in the crime. In this case, you may not see justice for the crime, but at least you've recovered your losses.
Be proactive! Put yourself in the cardholder's shoes.
There doesn't have to be a monetary loss or even a purchase made in order for a crime to be committed. As merchants we must be proactive against credit card fraud, even if it is only an attempted purchase. This is called "criminal attempt" at unlawful use of a credit card, and it is still a crime.
Pay attention to failed credit card transactions that are suspicious. Again, look for the red flags that I pointed out in previous articles and check the AVS response code. If you suspect a purchase attempt was fraudulent, you owe it to yourself and to the cardholder to do your part in stopping the crook before he succeeds.
Again, call the cardholder’s issuing bank and ask them to do a courtesy call to the customer. Be sure to give your phone number so the cardholder can call you back. Mention that you had someone attempt a purchase on your website with his/her credit card and you suspect it may be a fraudulent transaction. If you're right, hopefully the cycle will start all over again with the cardholder calling the police to report the crime just as if a purchase was actually made.
This happened just recently on my site and I did just as I stated above. When the cardholder returned my call, she was so grateful I had taken the measures I did. She didn't even know her purse had been stolen until she got the call from American Express. Because I was proactive, we were able to stop the crook right away, and criminal charges are now pending against him.
Don't be passive about potential credit card fraud just because you may not be out anything...YET. As a community of Internet entrepreneurs we must stand strong and stand united against credit card criminals. If you are a netrepreneur, trust me, it's only a matter of time before this crime affects you in some way. Be proactive against the crime, regardless of what your loss may or may not be.
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Contact Michelle at 970-535-4139 to speak at your next event.