Employee theft of customer information is a growing challenge for businesses and merchant service providers. A number of advances in technology have made it easy for unscrupulous employees to steal customer credit information. Lax security procedures can also allow employees to pilfer or misuse the data.

Here are some typical ways employees can perpetrate credit card fraud:
 •  Process a credit transaction to their own account - Employees may issue credits to their own credit card or to an accomplice's card from the Merchant's credit card processing terminal using funds meant for the merchant's direct deposit account.
•   Record card numbers - Employees may pocket receipts left behind by cardholders or may copy card numbers onto a separate piece of paper. Credit card processing terminals that truncate the card number on the customer's receipt can help your business avoid this type of fraud.
•   Use a card skimmer - A dishonest employee can steal valuable information right off a customer's card through use of a small, battery-operated "card skimmer." This hand-held device reads a card's magnetic stripe and records the cardholder data for later download to a computer. From there, the numbers can be used to make unauthorized purchases or create counterfeit cards.

How to Combat Employee Fraud
•  Monitor credit card processing activity daily.

•  Password protect the credit function on the credit card processing terminal.
•  Secure the credit card processing terminal during non-business hours.
•  Make sure all credits have accompanying internal documentation of customer information (name, and contact information) and reason for return or dispute.
•  Match credits to returned or disputed goods or services, verify with customers that they did actually return / dispute goods or services.
•  Have more than one person review monthly merchant service provider and bank statements.
•  Review any credit card processing batches with negative dollar amounts (more credits than sales).
•  Track credits by card number, terminal number, employee, frequency, and dollar amount (exception based reporting).
•  Review any volume spikes in credit / return / dispute activity.
•  Inquire about additional products or reports available for review of credit card processing transaction detail, i.e., MerchantConnect Premium.
•  Protect your passwords and verify internal access controls for online account reporting, and checking account change requests.

Labels: credit card processing, employee fraud, merchant services