City of Palmdale

Official Web Site

BUSINESS

Pay Ranges

HOME

CONTACT CITY STAFF

Credit Card Fraud

Credit card fraud has the unique distinction of being a modern crime. Within the last decade, credit card fraud has become a complex, worldwide law enforcement problem that affects the economy and is often closely related to crimes of violence and organized crime.

Credit and charge card fraud costs cardholders and issuers hundreds of millions of dollars each year. It is estimated that there are over one billion credit cards in circulation worldwide today. The growth rate of fraud and the dollar amounts involved are increasing.

Stolen credit cards or "hot card" losses can be reduced with alertness and proper security measures by you and your employees.

Warnings for Merchants

Account information.
Do not divulge cardholder account and transaction information over the telephone unless you initiated the call.

In one scheme, a caller posing as a bank representative informs the merchant that "the system has been down," and they need to reprocess the transactions. This individual is then able to use the cardholder information the merchant supplies to perform fraudulent transactions or create counterfeit cards.

In a similar scheme, an individual posing as an FBI or U.S. Secret Service Agent requests transaction information for comparison with a list of account numbers they uncovered in an arrest. The unsuspecting merchant gives the account numbers, names, expiration dates and any known addresses to the caller. This information can then be used by the fraud perpetrator to commit credit card fraud.

Notify your bank immediately if you receive such a call.

Laundering.
Individuals may approach you to deposit - or launder - sales drafts for them. Usually these merchants do not have a contract to accept credit cards with a bank either by choice or because they cannot obtain one. In exchange for depositing their sales drafts, they offer you a percentage of the deposit ranging from one to 20 percent.

Laundering is a violation of the law and you could be charged with being an accessory to fraudulent activity.

You are responsible for any transactions deposited into your merchant account. As many as 100 percent of the laundered transactions may be charged back on sales that you did not generate and debited from your account.

Merchants all over the country have suffered the consequences of draft laundering. Many have been forced to declare bankruptcy to cover the losses.

What to look for:
Customer-

The chatty customer or the one who delays a purchase until the clerk is upset.
The customer who hurries a clerk just before closing time.
The customer who purchases without regard to size, color, style or price.
The customer who refuses alterations that are included in the purchase price.
The customer whose appearance is inconsistent with his or her type of purchases.

Card-

Numbers should not appear re-embossed, crooked or unevenly spaced.
Does the card have a partially dull or bumpy surface or is it bent around the edges? This may indicate that it has been altered.
The signature panel should not be taped over, mutilated, erased or painted over.
The magnetic stripe should not appear to be deliberately scratched or destroyed to force manually keying of the card number.

Security features on credit cards change frequently so please refer to the cards website for the most up to date information.

The use of an ultra violet light is strongly recommended to identify fraudulent or altered credit cards. These lights are also highly effective in identifying counterfeit currency as well as fraudulent and altered identifications such as drivers licenses.

For more information regarding credit card fraud, or to schedule a presentation, contact the Business Watch office at 661/267-5170.

Back to Publications and Crime Prevention Tips

En Español/Other Languages: