In Tandem
Stop credit card fraud by pairing solid policies with new technology.
When retailer Mark Berkowitz, 49, asked a phone customer for the
name and number on his credit card, he knew he was being scammed.
"The guy said his name was Patricia," recalls the owner
of Derby
Appliances Inc. in Edison, New Jersey, which sells appliances
and electronics. "If I hadn't questioned it, I would have
been liable for the cost." U.S. retailers get ripped off to the tune of about $1.5 billion
per year due to credit card fraud, says Dennis Behrman, a research
analyst with Financial Insights, a Framingham, Massachusetts,
research firm. Protecting yourself without alienating customers, he
says, requires a combination of new technology and good business
practices, including: - Adopting
technology:
- Behrman says more retailers are moving
to PIN-based terminals, which require customers to input a personal
identification number to complete a credit card transaction. On the
horizon, some financial services companies are experimenting with
biometric identifiers, such as scanning fingerprints to match a
card with the user.
- Verifying
customers' contact information at the point of
purchase:
- "Cross-channel authentication
helps catch fraud," Behrman explains, "and gives you an
opportunity to provide better service by keeping current
information."
- Posting your
policies:
- If customers know in advance that
their signature will be checked or they'll be asked for a
second ID, they're less likely to be miffed when it
happens.
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