How retailers can combat credit card fraud
April 20, 2015

Companies that accept credit card payments need to be vigilant about preventing fraud. Merchants may find themselves liable for fraudulent transactions if the customer issues a chargeback and says he or she did not make the purchase. While the EMV transition in October is expected to help retailers prevent fraudulent activity, merchants can take certain steps to better mitigate the risk now. What do retailers need to know to better guard themselves against fraud?

Elite cards carry a higher risk of fraud
According to data security provider Forter, elite credit cards such as the American Express Black Card and the Visa Infinite are twice as likely to be compromised. These cards are frequently invitation only, and cardholders need to charge a high amount every year to keep their accounts active. Because high-income consumers tend to hold these cards, a large purchase may not set off any alarms, allowing cybercriminals to continue making purchases - whereas a pricey purchase could immediately alert the average consumer. Retailers need to be aware of this risk.

Is security beyond EMV possible?
EMV chip cards are expected to improve security because they generate a code unique to the transaction. However, some security experts aren't convinced EMV cards will completely eliminate the risks of fraud, especially online. A French company released a prototype of a credit card with a mini ink screen similar to a cellphone, which is powered by a lithium-ion battery. The battery would last for three years and would change the CVV number at least once an hour, according to CNN Money.

Even if a cybercriminal managed to write down the card number, expiration date and security code from the back, the card would be useless. If the prototype is popular with major banks, these types of cards could hit the market as soon as 2017.

Verifying credit cards with mobile devices
As online fraud grows, merchants need tighten their security. Retailers are the ones who will be liable if consumers report a chargeback. If the payment industry moved to associate a mobile phone number with a credit card, consumers and merchants would be better guarded against the risks because the chip would be an additional layer of authentication, Mobile Payments Today reported. In addition, most adults have a mobile device, which would make this a viable solution. Cybercriminals outside the U.S. have ways to duplicate U.S. IP addresses, but it would be more difficult to duplicate the phone number needed to complete the transaction.

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