Payments: Card Fraud Prevention Tips

Payment Card Fraud Prevention Tips

Payment card fraud remains a clear and present financial danger for merchants, banks and consumers. myKaarma is committed to working closely with all its dealership customers, as well as their customers to prevent fraud and to fight fraudulent chargebacks. 

Since payment cards transitioned from mag stripes to EMV chips, merchants using chip-activated terminals benefit from a significant security upgrade. Each time a chip card is used at an EMV terminal, the transaction generates a unique, one-time code. This makes it much harder for fraudsters to create and use counterfeit cards. Visa emphasizes that this process is extremely effective in reducing counterfeit fraud. (Visa Chip Technology Overview)

myKaarma offers the following tips and references for dealership service departments using myKaarma payments to assist in the ongoing fight against fraud.  Details for each are provided below.

• Follow – all card brand rules and guidelines for fraud prevention
• Watch – for suspicious activity
• Secure – card-present transactions by switching to secure EMV card readers  
  
  

Following the card brand rules is the first rule for fraud prevention.
Your dealership’s merchant agreement is the authoritative source for which rules apply. For up-to-date merchant policies and guidelines, see:

• Visa: Visa Core Rules & Product & Service Rules and Visa Merchant Resources
• Mastercard: Mastercard Rules for Merchants & Compliance Programs
• American Express: American Express Merchant Reference Guide and Amex Merchant Policies & Procedures
• Discover: Discover PCI Overview and Information Security & Compliance (DISC) Program 

Dealers should also confirm with their acquiring bank or processor, since some rule application, liability, or thresholds can vary by acquirer.

Card brands provide ongoing guidelines and updates to help you secure transactions and prevent fraud with the help of your front line employees.  Check resources available from: VISA, MasterCard, American Express and Discover.

Watching for suspicious activity is important for every entity involved in a payment card transaction.  myKaarma’s experience with auto dealership service and parts departments has helped us to identify a few situations which should alert dealerships to possible fraud.  Each dealership may face unique sets of circumstances which help them spot suspicious payment card activity. myKaarma offers a few suggestions for spotting possible fraud:

1. New customers who place multiple high cost orders and ask to pay online.
2. New customers who want to use their own shipper or courier.
3. Large orders for multiple quantities of the same part. Where the customer does not have a history of similar types of transactions.
4. Customers who want to place parts orders under unusual circumstances and in contradiction of the dealership’s policies such as using multiple payment cards for a single transaction.

Securing transactions can be as simple as switching to EMV approved card readers, such as those offered by myKaarma.  Ask your sales representative for details on how to replace old legacy card swipers with new secure EMV card readers.  

For merchants, such as myKaarma dealerships that continue to use legacy non-EMV card swipers, VISA offers several recommendations found here to reduce counterfeit card fraud, such as comparing the last 4 digits of the physical card against the printed transaction receipt.  If the numbers do not match, VISA recommends cancelling the transaction and asking for a different form of payment.  

Although the merchant card brand rules differ for VISA, Mastercard, American Express and Discover, it is currently acceptable under all the card brands to ask for identification from the customer at the point of sale.  Be aware, however, that for at least VISA and Mastercard, it is not now generally permissible to require identification to honor their respective payment cards.  If suspicious activity is detected, all card brands recommend that the merchant employees follow that merchant’s procedures. [See VISA - 5 Important Visa Rules Every Merchant Should Know]

Although myKaarma makes every effort to assist dealerships in spotting counterfeit cards and fraudulent transactions, the dealership’s agreement with each card brand and their acquiring bank governs the liability of the dealership for fraudulent charges.   

For more information, myKaarma recommends that dealerships check the card brand resources above, and view additional educational videos from our Online Learning Portal.

These videos offer a brief overview of Best Practices for Fraud Prevention: