Jewelers – Fraud

Preventing In-Store Credit Card Fraud

It’s happened to jewelry stores from New York to California. A “customer” shops for a high-value item, finally makes a selection and hands the jeweler a credit card for payment. Nothing unusual, except that the credit card is stolen. The professional thief even has a fake driver’s license that matches the credit card information. In many instances, the card owner isn’t even aware that the card is missing.

What’s a Jeweler to do?

If you haven’t already purchased a new EMV chip credit card machine, now might be a good time. Effective since 2015, you and your Processing company are liable for counterfeit smart card transactions. EMV stands for “Europay, MasterCard and Visa,” with the goal of creating world-wide standardized protocols for “integrated circuit” cards and the hardware necessary to accept these cards.

The new cards look like the old magnetic strip cards with one exception: they have a small square metallic chip on the front. The chip holds payment data — some of which is currently held on the magnetic stripe on old cards — and provides a unique code for each purchase. The metallic chip is designed to reduce fraud, including counterfeiting.

Here are other steps:

  • Review your contracts with credit card processors/ issuers regarding fraudulent use of cards and identity theft. If the card processor can charge back a fraudulent purchase, you may be on the hook for the sale.
  • Inform staff of this current ID/credit card fraud situation and review your procedures for accepting payment, especially for high-value items. Remember, you are doing your customers a service by assuring that credit card charges are legitimate.
  • Check the credit card security features. Use a black light to view the images encoded on major cards (MasterCard, Visa, American Express, and Discover).
  • Verify that the name, address and signature on the card match the individual’s photo ID. Look at the photo to assure that it matches your customer.
  • Swipe the card and check the authorization response. Assure that the embossed account number on the front of the card matches the account number displayed on the POS
  • Trust your instincts. If you feel something isn’t right, call the credit card Voice Authorization Center and inform the operator of a Code 10 Authorization Request. The call will first be received by your merchant bank, which may ask for merchant and/or transaction details. The call will then be transferred to the card issuer; a special operator will ask yes/no If possible, hold onto the card during this phone call. The operator may authorize the charge, deny the charge, or ask to speak to the cardholder to determine if he/she is the true card owner.
  • Report credit card fraud and ID theft to your bank or payment processor, your local police or U.S. Secret Service office, and your insurer or insurance broker.

Be proactive! Develop a plan and execute!