Card-Present Fraud

Card-present fraud is a type of credit card scam in which the card is physically presented to the merchant during the fraudulent transaction.

Card-present fraud is theoretically easier to prevent than fraud where the card is not present because the merchant has the opportunity to examine the credit card, as well as the customer’s behavior, for signs of suspicious activity. Of course, detection of fraud even when a card is present requires the merchant and their staff to be observant and diligent about following fraud-prevention procedures.

Credit card payment processors require merchants to take specific steps to minimize card-present fraud. One of these steps is to check the card’s security features, which often include a holographic image or holographic magnetic stripe, with features varying by card. Two additional steps are obtaining credit card authorization by swiping the card through the payment terminal, and getting the cardholder’s signature if the authorization request is approved. Merchants may also request that the cardholder present photo identification.

Card-present fraud can occur when credit card information is keyed in manually because the magnetic stripe is not readable and an unreadable magnetic stripe is sometimes a sign of a counterfeit card. Other signs of possible card-present fraud are when a consumer purchases many items, seemingly without caring about their price, style or size; when a consumer tries to rush the transaction or distract the cashier; or when the consumer makes large purchases near the store’s opening or closing time.

Another way merchants can detect card-present fraud is to make sure the account number begins with the correct digit. For example, all MasterCard credit card account numbers begin with a 5, all Visa credit card account numbers begin with a 4, all American Express credit card account numbers begin with 37 or 34, and all Discover credit card account numbers begin with a 6.

In addition, the first or last four numbers of the credit card account number will usually be printed in a second place on the card, such as directly below the embossed account number or on the back of the card on the signature panel, with location varying by card issuer. A card that looks like it is fake or has been altered can also tip off a merchant to possible card-present fraud.

If a merchant suspects card-present fraud, they should immediately call the credit card authorization center to report it. If a card is detected as fraudulent at the point of sale while the customer is still present, the payment authorization center may instruct the merchant to keep the card if it can do so safely.