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The Caribbean Credit Card Corporation Ltd.Limiting Exposure to Fraudulent Transactions & What to do if you suspect fraud

Facilitator: Janiere Frank Fraud & Compliance AnalystJune 16, 2011.1Legal Disclosure These materials are provided for informational purposes only and should not be relied upon for marketing, legal, regulatory or other advice. You should independently evaluate all content and recommendations in light of your specific business needs, operations and policies as well as any applicable laws and regulations. Caribbean Credit Card Corporation Ltd. is not responsible for your use of these materials, including errors of any kind, or any assumptions or conclusions you might draw from their use.

Use of the following information is the sole and exclusive responsibility of the user.

2Enjoy the Benefits of the Card SystemIncreased Sales & Customer SatisfactionConsumers spend more when theyre not constrained by cash on hand.

Speed of CheckoutNo more counting change, return checks.

Improved EfficiencyCan save you time and money by minimizing cash handling and payment reconciliation

Currency Conversion (except Local & US)Settlement is in the currency of your goods regardless of where the cardholder is from.

3Limiting Exposure to Fraudulent TransactionsAGENDAFraud Prevention Best PracticesHow to Prevent a Potential Chargeback TransactionHow to MinimizeCopy RequestCard Acceptance Procedures*The Merchant AgreementIdentifying theHigh Risk Factors4Card acceptance Procedures- Not go into but show how the simple ### procedures can reduce copy request, limit merchant chargebacks and avoid fraud reporting.High Risk FactorsCounterfeit CardsCardholders are not the only ones affected by Identity TheftHackersInternal & ExternalDishonest CustomersGoods not received Goods defectiveService not providedDishonest EmployeesObtain cardholder information for personal use at home

5Merchant AgreementMerchant shall only use Sales Vouchers in the form supplied or approved by the Bank.Merchant must operate under the agreed Merchant Category Code (MCC)Prohibited from disbursing funds in the form of cash

6Fraud scheme: Cardholder instructs merchant via email to debit card for more than transaction amount. Merchant to retain a portion for his trouble and must courier the balance of the excess to cardholder for payment to his travel agent. (Usually a hotel merchant). We have an example where a merchant sent some computers (4), purchased from a different merchant with cash to a fraudulent cardholder. The merchant had charged the cardholders card in excess to cover the purchase of computers and a small commission for himself.Merchant AgreementMerchant will NOT charge any fee for accepting payment by the Qualified Card All goods and services shall be supplied at the same price and rates at which they are offered to other customers of the Merchant

7Merchant AgreementThe Merchant is prohibited from accepting a card to collect or refinance an existing debtprocessing a transaction for collection of a dishonored checksubmitting sales draft on behalf of another merchant

8Minimize Copy Request Copy Request is a request by the Cardholder to the Merchant for a copy of the actual Transaction Receipt. 9Reasons for Copy RequestSatisfy a cardholder inquiryTransaction Information Document (TID) needed for cardholders personal records expense reportingSubstantiate a Potential Chargeback or Fraud Report Cardholder Does Not Recognize TransactionSupport legal or fraud investigation1030 days to respondHow to Minimize Copy Request Make sure your Business Name is legible on receiptsChange point-of-sale printer cartridge routinely

Change point of sale printer paper when color streak first appears

Handle carbon paper carefully

11How to Minimize Copy RequestMake sure Customers can recognize your Name on their bills

Train your employees to review sales drafts for accuracy and completeness

Make sure the customer signs the sales draft & is given their customers copy Merchants who keep copy request to a minimum are more likely to have lower Chargeback rates.12CHARGEBACK A Transaction that a Cardholder returns to the Merchant13Chargeback ReasonsCommon Merchant ErrorsTransaction Amount DifferCard Not Valid or ExpiredCredit Not Processed Late PresentmentDuplicate Processing14Transaction Amount DifferVerify that Invoice & card receipt matches or reconciles

Ensure that the cardholder signs the Hotel or Rental loss, theft, damage agreement which states that the cardholder is responsible for additional charges

15Card Not Valid or Expired Take extra care to write the card number correctly on the manual sales draftOnce the card is present it should be swiped / imprinted as merchant opens himself to chargebacks (especially MasterCard)

Verify Card Features & Card Expiry dateEg. Pay special attention to Hotel guest whose check out date is near the end or beginning of the month

A card should not be used before the VALID FROM date

16Credit Not ProcessedDeposit credit receipts with your Bank as quickly as possible, preferably the same day as the credit transaction is generated

At time of transaction, disclose to the cardholder any policy regarding returns, refunds or service cancellation

To avoid currency conversion issues, Do Not process refunds on the POS terminals. Instead forward reversal request to your Bank

17Late PresentmentSubmit all manual receipts to the Bank the same day of the transaction

Merchants have 30 days from the transaction date to submit all manual receipts Fax or email copy of manual receipts

18Duplicate ProcessingDuplicate Processing is one of the top three (3) merchant chargeback codes

Provide proof of two separate transactions / Provide proof of PIN present at ATMs

Wait for POS terminal response before attempting to process the transaction a second time.

Ask Manual Authorization Representative to verify that attempt at POS terminal was unsuccessful / not authorized. 19Duplicate ProcessingReconcile account daily Manual authorization should not be added into the POS end of day net amount

Reverse all invalid transactions immediately

Ensure that transactions are entered into POS terminal only once and deposited only once

Make only one imprint of the card for each transactionVOID & Discard any invalid receipts

20Chargeback ReasonsTop Merchant ChargebacksRequested Transaction Data not received

Service not provided / goods not received (defective not as described)

Transaction Not Recognized / No Authorization

Fraud: Card Present / Absent Environment21Requested Transaction Data Not ReceivedRespond to ALL copy requests within 30 days from copy request date.

If copy can not be retrieved, request that a credit be processed to the cardholders account (c/back exchange rate)

Copy Request retrieved information should be accurate and legible

22Service Not Provided/ Goods Not ReceivedIf a customer request cancellation of a Recurring Transaction, always respond to the request and cancel immediately

Ship merchandise before depositing transaction.

Process a Name and Address verification before shipment of goods or for services with high values

23Service Not Provided/ Goods Not ReceivedATM merchants must provide proof that cash was dispensed

Inform cardholder of Hotel/ Motel No Show policy charge

Provide proof of product or service delivery Obtain from the delivery service company document with the name and signature of person that collected the item at the shipping address.

24Service Not Provided/ Goods Not ReceivedProvide Cardholder with our Customer service contact information

Test Electronic or Battery operating items before processing transaction

Ensure charges are not processed if Cardholder paid by other means (cash/check)

25Transaction not Recognized No authorizationSeek Authorization for all transactionsHotel should authorize transaction at check-in point

Do not complete a transaction if the authorization request was declined

If you receive a Call message in response to an authorization request, call your authorization center26Transaction not Recognize No authorizationEnsure that the Doing Business As merchant name and Address is legible on cardholders receipt and matches the name on the cardholder statement

Verify all Card Security features and cardholder identification

At time of transaction, disclose to the cardholder any policy additional service charges, regarding theft, damages or early check out 27Fraud Card Present / Absent EnvironmentProvide proof of card presence and obtain cardholder signature

Verify cardholder identification and cardholder authorization to use the card to settle the accountCopy of card and Photo IDName and Address Verification check

Seek Authorization for all transactions28Fraud Report Reasons Lost & Stolen Counterfeit CardCard Not Present

29Fraud Prevention Best PracticesLost and Stolen fraud types can be prevented at the point of sale terminals.

Compare signatures on receipt and card

Compare name with valid photo ID

30Fraud Prevention Best PracticesCard Not Present fraud can be prevented at the point of name and address verification check.

Verify Name, Address and telephone number

Seek copy of card and valid photo ID before processing shipment of goods

Cardholder Identification System (e-commerce merchants)

31Fraud Prevention Best PracticesCounterfeit Card fraud can be prevented by checking the card security features.

Name on card matches name on receipt

The four digit BIN number matches the first four embossed number on the card

Verify valid Visa or MasterCard logo

In suspicious situations call your card center for a Code 10 Authorization

32CONCLUSION There is an increasing shift of payment from paper to plastic. Fraud can be Prevented at the Point Of Sale Terminals

Limit Exposure to Fraud by:Adhering to your Merchant AgreementFollowing ALL card Acceptance ProceduresChecking For ALL Valid Card Security FeaturesEnsuring that your Business Name on the Cardholder Billing Statement and Receipts are the SameAvoiding Common Merchant Errors that can lead to potential Chargebacks

33What to do if you suspect fraudCode 10 AuthorizationCODE 10WHAT DOES CODE 10 MEAN?

Code 10 is the term used by merchants when they call an authorization centre to let the centre know that they are suspicious of a card, cardholder, or a specific transaction.BE SUSPICIOUS OF:A card that appears to be altered or counterfeit

A card number that does not match the number shown on your magnetic card reader or electronic point-of-sale terminal.SUSPICIOUS BEHAVIOURCARD PRESENT ENVIRONMENT

Random purchases without regard for size, style, color or priceRefusing free delivery on large items or high-dollar purchasesAttempts to rush or distract sales clerk during transactionPurchases, leave store, then returns to purchase moreLarge purchases when store opens or just before it closesAsk for cash back with a credit card SUSPICIOUS BEHAVIOURNON-CARD PRESENT ENVIRONMENT

Rush OrdersSuspicious shipping addressesOrders consisting of several of the same itemMade with multiple cards but shipped to a single addressMultiple transaction on one card over a short period of timeMultiple shipping addressesIf the cardholder is present and offers the card number but is not in possession of the card*CAUTION!A cardholder may have a good reason for behaving strangely so remember to be polite and think rationally.WHAT TO DO IF YOU ARE SUSPICIOUSDo not panic!Hold on to the card.Call the authorization centre and say, I have a code 10 authorization request.Your authorization centre will connect you to the issuing centreIf the operator instructs, pick up the card but only if it is safe to do so.Questions and Comments

41Thank You for your time and attention

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