Protect Your Business From Card Fraud

When the EMV liability shift made its debut in October 2015, it created a lot of buzz, but it also came with a lot of confusion.  What many small to medium sized businesses didn’t understand was that this shift would cause credit card thieves to target smaller businesses for their crimes.

Unfortunately, we have recently witnessed small businesses suffering monetary loss due to fraudulent card use, and it just proves that criminals are taking aim at small to medium businesses. These businesses accept EMV payments, so how are thieves bypassing this system setup to protect cardholders and businesses alike?  They are making their failed payment attempts look like terminal error causing a business to key-enter the card and eliminating the security steps needed for EMV transactions.

How they do it

After fraudulently obtaining a cardholder’s information, the criminals are creating their own “copy” of the card with a magnetic strip but no EMV chip.  When paying for a transaction, the card gets swiped and the terminal displays that the EMV chip must be inserted.  At this point, the employee completing the transaction will likely manually key in the card thinking the terminal has malfunctioned because this card clearly has no chip.  The transaction is approved, and everything seems fine until you get a chargeback notification for this payment.  Because of the EMV shift, it is now your business’ responsibility to cover any fraudulent transactions.  This means even if you dispute the chargeback with the appropriate information, you will not receive your funds.

Protect your business

As a business owner or manager, you can take many steps to ensure your business is protected from fraudulent card use.  Here’s a list of things you NEED to do to avoid losing potentially large amounts of money.

1. Make sure your EMV equipment is properly working.
Faulty equipment isn’t going to protect you in the event of fraudulent card use. You’ll want to be certain the technology is current and updated.
2. Educate your employees.
Train your team about card fraud and what can happen if they do not follow proper protocol in regards to transactions. If someone is genuinely trying to make a purchase, he or she will not mind providing another card or calling their card provider to determine the cause of any potential card read error.
3. Talk to your merchant provider about updates and current events regarding card acceptance and fraud.
This industry is constantly changing, and keeping an open dialogue with your provider will help you stay aware of potential risks and changes. Join our email list to receive occasional newsletters and information. We will gladly keep you in the know.

 

Debit Card Fraud Decreases While EMV Adoption Increases

The Study

From 2015 to 2016, financial institutions in the US significantly increased usage of EMV enabled chip cards.  During that time period it was also discovered that the fruad loss rates of debit cards were lowered by about 28 percent from the 2015 levels.  This was all determined in a report PULSE Network (Discover Financial Subsidiary) recently released.

The study found that since the 2015 fraud liability shift was enacted, more and more US debit cards have been made more secure with EMV chip technology.  It’s estimated to be about 80 percent of debit cards that have been converted.

According to the Vice President of Fraud and Risk Management for PULSE, Jim Lerdel, there have been quite a few measures taken by the financial services industry that have resulted in the reduction of fraud losses reported by financial institutions.  He names the EMV chip card conversion, mobile commerce tokenization,and increased investment in fraud-fighting solutions as three top measures helping the cause.

Although fraud loss levels are seeing improved results, the study did reveal that fraud is still quite a large burden financially for debit card issuers.  The study estimates that almost $900 million was lost in 2016 to debit card fraud.

Based on the study’s findings, 2016 showed increased usage in debit cards.  Transactions where a debit card were used rose about 7 percent year-over-year.  The report also found that active customers’ number of debit transactions grew 6 percent to 23.6 transactions each month.

The full results of the PULSE Network study is available here.  It was performed by the independent management consulting firm, Olive Wyman and commissioned by PULSE Network.  The collective information was obtained through 50 participating financial institutions.

Our Take

We knew that the fraud liability shift in 2015 would start to bring about big changes in the industry as a whole, but especially with debit card usage.  This report just goes to verify our past claims.

If your business is still unable to accept chip card payments, you could be held responsible.  Please contact us today to find out how you can easily and quickly accept EMV chip card transactions at your business and avoid costly penalties and fees.

(866) 863-2660

info@targetedms.com