During this busy retail season, long lineups at the cash mean sales clerks are pressed to process more transactions than usual. Criminals take advantage of this high-pressure situation to commit fraud. Remember, if a customer’s debit card is compromised or a point of sale terminal (also known as a PIN pad) is stolen from your store your brand or business may suffer.
Despite the holiday rush, merchants should encourage their sales clerks to process each transaction diligently and to ask for secondary identification from any shopper whose credit card transaction seems suspicious. Employee education is critical. As important as fraud awareness is for you, it’s just as important to educate your front-line employees about payment card fraud. Merchants can also help deter fraud by performing some routine inspections around their cash registers.
Point of sale terminals
To criminals, point of sale terminals are as valuable as cash and they usually target the ones that process the most transactions, typically terminals found in high-volume stores, high-traffic restaurants and service industries. They steal the terminals from stores, re-engineer their internal components, then return them to their original locations. This allows them to illegally capture the magnetic stripe data and personal identification number (PIN) information as it’s entered by cardholders. This is commonly known as “skimming” and it’s the process that allows criminals to obtain the information they need to make counterfeit cards. To switch a point of sale terminal, fraudsters replace a legitimate terminal with an identical fake version so the merchant doesn’t notice the terminal is missing. Later on, they return to the store and put the rigged terminal back in place. Merchants can help deter this kind of fraud by following these tips:
• Ideally, your terminal should be secured (anchored or cabled to the counter top) and removed and locked away each night.
• Also, you should make your staff aware of the terminal’s serial number, which is found on the underside of the device. This number should be written down and posted by the cash register. Staff should check the terminal’s serial number at the beginning and end of each day and several times throughout the day to make sure no one has replaced your terminal with another.
• Tell your staff to watch for shoppers who try to distract them. For instance, bulky items placed on the counter top can be used as cover when tampering with a point of sale terminal.
• Also be wary of shoppers who try to preoccupy sales staff while an accomplice uses the point of sale terminal. These fraudsters commonly work in teams.
Counterfeit credit cards
While any of the following can occur during a legitimate transaction, these factors are often present during fraudulent transactions conducted with stolen or counterfeit credit cards. Be wary of any customer who:
• carelessly or randomly purchases expensive items. Watch for people who buy large numbers of the same item such as designer goods, electronics and tools.
• asks to charge the cost of an expensive item on more than one credit card. They may be unsure of the limits on their stolen cards and worried about exceeding them.
• hurries the clerk at closing time.
• is excessively talkative because he or she seems nervous. They may be trying to frustrate the sales clerk.
• pays with a credit card whose number doesn’t match the number on the cash register screen or receipt. Sales clerks should always check to make sure those numbers match.
• If you suspect someone is trying to use a stolen or counterfeit credit card in your store, ask to see photo identification. Refuse to sell to anyone who cannot comply with that request – it’s your right and it prevents fraud.
Why report it?
Merchants’ reluctance to report fraud and attempted fraud helps criminals. Many different institutions help track down and punish con-artists, but they can only do that when businesses report breaches. When crimes are left unreported, criminals survive to attack other merchants and become more sophisticated in their approach. If you suspect that a fraud has taken place in your store, or if you’ve managed to thwart an attempted fraud, please report it to your police force of jurisdiction. Your report may contain a vital piece of information that helps police catch a thief before he steals from another merchant just down the street.
Also, don’t forget that the holiday season is an opportune time for criminals to attempt to pass counterfeit bank notes at your point of sale. Your cashiers should routinely verify the security features of all notes, helping keep counterfeit bills out of your till.
Everyone has a role to play in preventing fraud – including merchants. Don’t let valued customers get burned in your store. For more advice on preventing retail fraud, please visit the Bank of Canada’s website at bankofcanada.ca.
