In Tandem

Stop credit card fraud by pairing solid policies with new technology.
Magazine Contributor
Writer and Author, Specializing in Business and Finance
2 min read

This story appears in the May 2004 issue of . Subscribe »

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.

More from Entrepreneur

Are paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.
Get Your Quote Now

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

It Started As a Joke and Turned Into a Startup That Raised $1 Million in Funding