How to Protect Your Business from Credit Card Fraud

If you have a business that accepts payments via credit cards then you’re probably familiar with the term “chargeback”.  Although a chargeback doesn’t happen very often, they can be devastating based on timing as well as the amount taken from your checking account.  Recently, we had two customers call us within a week’s time stating that they had been dealing with some sizable chargebacks for work that had already been completed.  They both were inquiring how they could win their case and then how could they protect themselves from this happening again in the future.

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In-Person Credit Cards

If you’re business operates in a retail environment where you swipe the card and obtain a signature then you are already increasing you’re odds of winning a chargeback scenario.  If this is the case, the only other thing you need to do to help yourself is to keep your signed receipts for at least 7 months.  Consumers have up to 6 months to file a chargeback on their card!! If you keep a rolling 7 months file of your charges you will have proof of their purchase.

Online or Not-Present Credit Cards

If your business operates online or in an environment where you don’t see your customers face to face, then winning a chargeback is more difficult.  First and most importantly, you must understand and remember that the rules and regulations that are in place lean towards the cardholder.  If you understand this then you will be more stringent and set up your own guidelines for accepting payments.  Not every business is the same so it’s hard for us to provide you with clear cut ways of helping you protect yourself, but there are some steps that you can take.  One step a business can take is to make sure that there is verbiage in your agreement that clearly states their termination policy, refund policy, and payment acceptance policy.  Being able to obtain a signatures is ALWAYS best!  If you can send your customer’s agreements that they can sign, with the amounts and any payment installments, and return it back to you then obviously your helping your cause.  If obtaining a signature is difficult then please realize that you are putting yourself at risk.  Every business model is different so my advice would be to get on the phone with your provider to initiate a conversation about protecting yourself.  If you don’t feel as though you are getting the answers you need you are always welcome to call us even if you are just looking for some advice.

If you are a company that has small tickets items, you may not be as concerned about receiving a signature.  However, if you are a company that does large ticket items a chargeback can be devastating.  A chargeback can happen on small ticket items too but for people committing fraud they will usually go for the large ticket items.  For large ticket items, that you take a credit card over the phone or online, my suggestion would be to fax an invoice or contract to them for signature and return, along with a copy of their driver’s license.  Most people that are legit will have no problem in doing this once they understand your policies for accepting credit card payments by phone or online.  If they have a problem with it then you should question their motives for doing business with you and do you really want to take that chance with a high ticket item?

Out of State Transactions

Do you ship out of state or out of the country?  The same suggestions apply to you as mentioned above for the large ticket items.  However, you need to take it a step farther.  Only ship to locations where the shipping and billing address are the same.  If not, personally I would not ship the item, but that is your call.  To help cover yourself from a chargeback, when shipping, always obtain an authorized signature FROM THE PERSON the item is being shipped to.  If you cannot obtain this signature, then tell the shipping company NOT to leave the package until the authorized person is there to sign for it.  Think about this for a second.  If you ship a package anywhere and someone signs for it, the person that purchased the item can say they never received it and do a chargeback.  The purchaser could lose the chargeback in the long run but chances are they won’t and you will be out of your money, your product and your time fighting the chargeback. 

Every day we are moving to a cashless society and have the ability to accept payments electronically without the consumer being present with their card is becoming the norm.  Unfortunately, the rules and regulations for credit card processing were established back when the only way to accept a payments using a credit card was by swiping the card.  So, when it comes to accepting payments, business owners must keep this in mind and setup their business accordingly. They must protect themselves from that unfortunate day when you get notified of a chargeback.

For questions or more information on this topic, feel free to call Chris at 602-635-6494 or visit us at

Printed with permission from Chris Damron.

Image by Mediamodifier from Pixabay

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