Types of Fraud

 

There are three main types of Credit/ Charge Card fraud of which you need to be most aware:

  • Counterfeit and altered cards
  • Telephone, Internet and Mail order fraud
  • Lost or Stolen Cards

COUNTERFEIT AND ALTERED CARDS

An altered or counterfeit card is a card that has been made by the fraudster using a copied magnetic strip that has been "skimmed" at another Merchant.

 

Skimming is a process whereby genuine Cards are swiped in a device to record the details of the magnetic strip. These details are later encoded onto counterfeit plastic, which may look like an American Express® Card. The counterfeit card is then embossed with the name of the offender.

 

Card skimming is typically targeted at high turnover establishments, such as restaurants, hotels and petrol stations, retail/clothing, electrical and liquor outlets.

 

Fraudsters using counterfeit cards often betray themselves with unusual body language or behaviour. Use our Cardmember Checklist to learn the telltale signs. Usually a counterfeit card will be of poor quality and missing the standard American Express security features. See our Card Checklist for what to look out for.

 

TELEPHONE, INTERNET AND MAIL

With this type of fraud, the fraudster uses a valid Card number and expiry date to make a transaction. Fraudulent transactions of this type incur a chargeback and a loss to you, the Merchant. Often a sign that this type of payment is fraudulent is that the offender requests goods be shipped to an alternate address.

 

A unique advantage of being an American Express Merchant is that you are able to verify the shipping address with the Cardmembers' billing address. Therefore, if the delivery address does not match the Cardmembers' billing address, it is advisable to contact the Authorization line on 021-3435 8886.

 

As a Merchant, you should record all available details of the purchaser and have certified support that the merchandise was delivered to the Cardmembers' billing address. Remember, an approval code alone will not protect you against chargeback if the transaction is a fraudulent one.

 

If any details of the transaction e.g., delivery address, are changed after receiving an approval code, remember to call Authorizations for a new approval code.

 

LOST OR STOLEN CARDS

Typically, the fraudster will find or steal the genuine Card from a Cardmember, from a parked car, or a stolen handbag, for example. You can catch this kind of fraud by carefully matching the customer to the Card and being aware of customer behaviour.

 

NON-RECEIVED CARDS

This type of fraud occurs where a fraudster has intercepted a Card in the postal system, and signed it in their handwriting, thus making detection difficult.

 

Two ways to catch out a potential fraudster from using this method are to:

 

  • Ensure the Card name matches the customers'. (e.g. female Card name, male presenter, Asian name, non Asian presenter)
  • Ensure the user is old enough to possess the Card by checking the member since date. (e.g. If presenter is 20, they cannot have been a member since 1967)

 

Fraudsters using counterfeit cards often betray themselves with unusual body language or behaviour, use our Checklist to be aware of telltale signs.