Fraud PreventionMerchant Services

Keeping You and Your Customers Fraud-Free in 2022

Credit card fraud, one of the most common forms of identity theft, is on the rise. Already a pernicious problem before 2020, the pandemic sent the number of fraud incidents skyrocketing, costing Americans billions of dollars. In 2021, the cost of credit card fraud was estimated at a whopping $8 billion. The number of victims of credit card fraud continues to soar; the FTC reported roughly 400,000 cases in 2020 alone.

Credit Card Fraud: Post-Pandemic Surge


Source: Federal Trade Commission Annual Report

Although most credit card issuers protect consumers against financial fallout by reversing fraudulent charges, the costs to consumers and to the broader economy are still real. Costs include the bank’s need to reimburse the charge, a risk they compensate through higher rates and fees, as well as retailers charging higher prices to deal with the same risk of chargebacks and nullified payment. Whether the bank, the merchant, or the card processor ends up having to pay for the fraud, the costs are passed along to the consumer.

For this reason, prevention pays. As criminals use increasingly sophisticated tactics to swipe your card information, here are some best practices to minimize your risk. 

Fraud Prevention: Consumers

Liability is rarely an issue for the consumer, especially when it comes to credit cards. However, consumers still have to go through the sometimes lengthy process of reporting and proving fraudulent purchases, as well as ordering a new card, a headache nobody wants to deal with. To avoid fraud in the first place, here are some smart consumer habits: 

  • Report a lost card or fraudulent charge immediately.
    This is the best way to avoid additional fraudulent charges and any related liability. According to the Electronic Fund Transfer Act, the consumer is not liable for any transaction made after a card is reported lost or stolen.
  • Check Early, Check Often
    The sooner a cardholder spots and reports a fraudulent transaction, the less the thief can steal and the quicker the issue is resolved. Check your accounts often, at least a couple times per week!
  • Review your credit report

Credit card fraud and identity theft are easier and more prevalent than ever before, with both seeing a surge since our lives became even more digital in the wake of the pandemic. Check your credit report and sign up for alerts from reporting companies like Experian to get an edge on criminal activity.

  • Use payment apps
    Though not invincible, digital wallets  like Apple Pay and Google Pay offer greater protection against fraud, since you don’t have to provide your physical card or directly provide card information to the merchant or processor.
  • Don’t Save your Credit Card Online
    We know that it’s a pain to reach for your wallet each time you make a purchase, but it pays to keep your credit card information saved with as few sites as possible. Each website that has your credit card information is a potential security breach, so opt out of saving your card information as much as you can.

For Merchants and Processors

Most consumers know that their credit card issuer protects against fraud liability. For this reason, liability is a greater concern for merchants, card processors, and issuing banks. Rules regarding liability depend on the credit card network used, such as Visa or American Express. Oftentimes the merchant is liable for transactions when no card is present, while the bank absorbs the cost of fraud if a physical card was presented at purchase. Regardless of who ends up footing the bill for fraud, all parties benefit from minimizing the risk. Here are some tips to keep your fraud costs down in 2022:

Preventing In-Store Fraud

  • Don’t Accept Damaged Cards
  • No Unauthorized Buyers

Fraudsters will often present a damaged card and ask you to manually enter the information on the card, effectively bypassing the card’s built-in security, such as the chip reader. Rejecting damaged cards is a wise way to avoid fraud.

The only person authorized to use a card is the person whose name is on it. While this can create some friction for people using a family member’s or spouse’s card, it is a smart practice to check ID against the card, especially if the purchase is suspicious for some other reason.

  • Use Updated Technology

Using the most up-to-date POS technology will help keep you ahead of fraudsters. Make sure your card processing solutions are mobile-friendly, and opt for chip readers and contactless payment, rather than swiping or manually punching in card information.

  • Rules are Rules—Don’t be Bullied!
    A favorite tactic for fraudulent buyers is to make you feel like you’re doing something wrong for enforcing these rules. Don’t succumb to bullying tactics; if the customer presents a damaged card, or isn’t the authorized user, or if any other red flag pops up, don’t let them intimidate you into accepting it anyway.

Preventing Online Fraud                                                                                     

For fraudsters in 2022, online this is where the money is. The following are factors that you can use to filter out likely fraud or prompt additional security checks, in order to better secure your online card payments.

  • Different Shipping and Billing Address

While this is fairly common for legitimate purchases, shipping a purchase far outside of the card billing address, such as to a different country, is definitely a red flag. The same is true if the IP location is far outside the card’s billing address.

  • Watch for Outliers

Is the consumer purchasing five identical items when most people buy one, or is it a massive order well above your average size? Watch for outliers such as these, and consider automating additional security measures when this happens.

  • Tokenization and Encryption

Tokenization and encryption are necessary to keep you PCI compliant and protect both yourself and your customers. Find a card processor with these built-in security measures to make sure your online storefront offers a safe, seamless experience.

  • Use Address Verification Services

Address verification services will help you identify a bad billing address before the purchase is made, saving you costs and headaches further down the line.

  • Check CVV and CVCs

One additional safety measure is to require the card’s security code. This is one more thing that can keep the fraudster at bay if he or she doesn’t have a physical card.

Staying Ahead of Fraud in 2022

As the digital payments landscape continues to evolve, we have to keep updating our practices to stay ahead of fraudsters. At COCARD, we’ve strived for twenty years to lead the card payments space in the Digital Age. The landscape has changed a great deal and we’ve changed with it, making sure you and your customers are secure and at ease wherever you do business.

We’re all in this together, working to reduce credit card fraud in 2022!


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