Royal Canal Financial Control Services

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Stolen Credit Card – Don’t be left with the liability

22nd October 2011

There have been a number of incidences recently reported to us of retailers feeling the pinch when the credit card company reversed credit card transactions that were put through their terminal.

This arises out of queries raised by the owner of the credit card and unless the retailer can demonstrate that it was a valid sale, then the credit card company is entitled to reverse the transaction on behalf of the cardholder. These reversals are known as chargebacks. Valid forms of evidence are signed credit card receipts from the customer, or a valid chip and pin transaction.

The fact that the credit card company processed the transaction does not in itself restrict the liability of the retailer. Where the retailer has not retained evidence of signature for non-chip-and-pin cards, or the signature does not match that of the card, this is not a valid credit card transaction. While human error can cause a loss to the retailer where this procedure is not carried out, it also leaves an opportunity for customer fraud.

Where a non chip-and-pin credit card has been stolen, the thief will attempt to use the card in a store where they feel it is unlikely they will be caught out. They don’t need a code to authorise the transaction, and simply sign for the sale. We would advise all retailers to be vilgilant to this issue.

Common signs to look out for:
• Unknown customer paying by non-chip and pin, spending little time shopping but managing to purchase a large amount.
• Unknown customer returning to repeat the act when the first attempt is successful.
• Unknown customer using a credit card to buy electronic money which is difficult to trace, e.g. money transfer, temporary credit cards.