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| Check out our Risk Management section for tools to reduce your losses and our case studies section to learn how you can reduce your chances of loss. |
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Fraud is any deceptive practice that intentionally misappropriates merchant processing activity for personal or financial gain.
When it comes to credit cards, companies encounter fraud in a variety of ways:
- Counterfeiting - the manufacture of fake credit cards.
- Phishing - sending e-mails claiming to be legitimate enterprises in order to obtain sensitive information with the intention of using it in identity theft.
- Skimming - retrieving data from the magnetic stripe of a credit card.
- Account bust-outs - sudden large cash advances on formerly inactive accounts.
- Fraudulent applications - new accounts opened for fraudulent individuals.
- Identity theft - existing accounts taken over by fraudulent individuals.
- Creditmaster - creation of fake credit card account numbers.
- Telemarketing fraud - selling fraudulent products or services over the telephone.
- Internet fraud - selling products or services from a fake Web sites or hacking into merchant databases and deriving credit card account information.
- Spyware - software consumers install unknowingly on their computers that tracks online usage and personal information. Visa.com 06/01/06
- Trojan Horse Virus - an e-mail virus usually released by an e-mail attachment. Visa.com 06/01/06
- Extortion - accounts accessed fraudulently followed by demands made for payment.
- Electronic Balance Transfers - fraudulent cash transfers made from an account.
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Merchants and consumers are not alone in their concern. Card associations have implemented changes through the years to protect merchants and consumers against fraud. Some of these changes include:
- Tamper-resistant signature panels.
- Magnetic stripes, with encoded verification numbers.
- Micro-printing, or tiny printing around the logo - which is extremely difficult to reproduce.
- Tamper-proof holograms.
- Features such as the Visa "flying V," and the MasterCard reverse italic "MC".
- Printing of the first four digits of the card number, above the embossed numbers, helping to deter criminals from ironing out valid numbers and embossing new.
- Cardholder Verification Value and Card Validation Code, or algorithmically derived numeric codes, are assigned for each account encoded in a magnetic stripe and included in electronic authorization.
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First National must continually do the following to help our merchants combat fraud:
- Scan the product horizon and continually develop solutions for fraud management.
- Provide fraud-related consulting services to merchants through all communications channels.
- Partner with associations to pilot products and be an early adapter whenever possible.
- Lobby associations for improved fraud management solutions.
First National is dedicated to arming our merchants in the fight against fraud - by providing you with the information and training you need to increase your awareness and reduce fraudulent activity.
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- Always follow best practices when accepting cards for payment.
- Consult our case studies section to learn how you can reduce your chances of loss.
- Make your staff aware of threats and provide education on ways to prevent fraud in your business.
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