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Tips for Business Owners to Reduce Credit Card Chargebacks

Posted by Concannon Miller on Tue, Jun 14, 2016

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Tips for Business Owners to Reduce Credit Card ChargebacksHave you seen a rise in credit card chargebacks since the October 2015 liability shift rules were put in place? 

Many retailers feel that this is an issue and they have seen significantly more chargebacks in larger dollar amounts. 

Most of these retailers are not EMV ready, which means they can be held responsible for the charges. Savvy fraudsters will target businesses who are NOT using EMV-enabled equipment. 

The liability for card-present fraud now lies with whichever party is the least EMV-compliant in a fraudulent transaction. For example, if fraud occurs when a chip card is inserted into a terminal that hasn't been upgraded, the merchant is responsible for the fraud. Any party that hasn’t implemented EMV may be liable for the fraud that results from a magnetic-stripe payment.

It is important to note that the shift in liability to the merchant only applies to counterfeit fraud tied to EMV chip cards.

If your business is still not EMV ready, here are some tips to help spot counterfeit credit cards:

  1. Damaged Magnetic Stripe: Ask for a valid ID or another card if you see this.
  2. Hologram Sticker: Look for a dull two-dimensional look. This is hard for crooks to reproduce.
  3. Microprint: The microprint typically duplicates the first or last four numbers of the account number. Most fraudsters miss this detail.
  4. Signature Strip: It should be a different material than surrounding plastic.
  5. Suspicious Behavior: Anyone can be a criminal. Look for nervous and rushed behavior.

 

READ MORE: Concannon Miller's tax services for businesses

A good best practice is to dedicate a set time each week to review credit card retrieval and chargeback notifications. Having employees scrutinize suspicious cards and having your office crew paying attention to retrieval and chargeback requests can help minimize losses.   

Merchants with items that are easily resold such as gift card are often victims of fraudsters targeting non-EMV compliant terminals so it is critical they create strict policies around gift card sales for larger dollar amounts.

You should be aware of and adhere to the card brands chargeback response times. Visa, Mastercard, Discover, PayPal allow 45 days and AMEX allows 20 days to respond to chargeback notifications.

In addition, retailers should be aware of retrieval response times. Visa, MasterCard, and Discover allow 30 days and AMEX allows 20 days to respond to retrieval requests.  

Topics: Business consulting

Concannon Miller’s unique, holistic and intimate approach to financial health sets us apart from smaller CPA firms with more limited resources as well as mega firms where mid-sized clients struggle for attention. Contact us here to talk about improving your business.

This communication is designed to provide accurate and authoritative information in regard to the subject matter covered at the time it was published. However, the general information herein is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purposes of avoiding tax penalties.

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