Fraud and Chargeback Prevention

Do you know the first warning signs of credit card fraud or debit card fraud?  Or what measures you should take take to minimize chargebacks to your business?  Both issues can be costly and can be a hassle for your business. Ensure your processing is protected and secure with the following best practices.


A chargeback occurs when a customer asks their card issuer to reverse their purchase. The liability of these funds may fall directly onto the merchant.  Common chargeback scenarios include:

  • Customer-disputed transactions
  • Duplicate processing
  • Inaccurate or incomplete transaction information
  • Processing errors
  • Fraudulent transactions

Additionally, all major credit card issuers have shifted chargeback liability from EMV chip card fraud to merchants who are processing with a non-EMV enabled terminal. You can read more about EMV liability here.

What Can I Do To Prevent Chargebacks?

The more information you as a merchant obtain in every transaction, the better the chances of winning a chargeback dispute. Developing a point-of-sale routine that is consistently reinforced by all employees is the most successful way to prevent chargebacks.

It’s vital to gather enough information at the time the purchase is made to best prove a cardholder successfully participated in the transaction and ultimately received the goods or services in return.

  • The best proof of a valid transaction is either a digitally signed receipt, printed signed receipt with all necessary information, or imprinted card receipt with signature and legible card numbers. Never alter any of these documents after the transaction has been completed.
  • If an authorization is declined for the entire sale amount, do not try to obtain authorization for smaller increments of the sale. Decline the card and request another form of payment.
  • Make sure to manually imprint the card any time it does not sucessfully swipe. Make sure the card number and expiration date are completely legible on the imprinted receipt, along with the merchant name and location.
  • For returns, make sure payments are reciprocated on the card used in the original transaction. Do not refund by check or cash if credit is due.
  • Respond to all returned retrieval requests with valid, legible documentation.

Identifying Fraud

Being able to detect fraud early can help save your business time and money. What quick steps can you incorporate to flag fraudulent credit card activity?

  • For over the phone or Internet orders, validate transactions using address (city, state, and zip) and/or CV2 verification. CV2 codes on all credit cards are the last three digits in the signature box on the back of the card.
  • Be skeptical with requests involving wire transfers through Western Union or MoneyGram. Once money is transferred electronically through these services, the funds are typically gone for good.
  • A red flag should go off if multiple credit cards are being used for one transaction, or if the same card is being used for several small transactions.

Have other questions or believe you may be victim of credit card fraud?  Contact our support team at (888) 998-6224 .

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