What do you do if you think you’re a victim of credit card fraud? We get asked this question a lot by the businesses that we look after.

In our experience the biggest risks lie in remote payment transactions, those where customers are not physically present for the transactions (generally called ‘customer not present’ or 'CNP' transactions). These are often card transactions taking place over the phone, mail or online, where the retailer can’t check the card itself to see if it’s valid and a pin cannot be used to verify the payment.

A common misconception on the part of businesses is that one of the banks involved in servicing the payment or receiving it, is automatically liable for all losses suffered as a result of card fraud. 

However, in the majority of cases where the customer is not present it’s actually the retailer who will be liable for the card fraud, in addition to having to pay the cost of any chargeback process. (A chargeback usually happens where a retailer does not fulfil its obligation to the customer for example, failure to deliver the goods, failure to pay an agreed refund or alternatively, when a card has been used fraudulently. The owner of the card will then contact their card issuer to report an unrecognised transaction that appeared on their card, and it’s at this stage, often weeks after the actual transaction that the fraud comes to light.)

It’s also worth mentioning that the bank's authorisation of the payment is by no means a guarantee of payment, it only reflects the availability of funds and that the card has not been reported lost or stolen at the time of the transaction.

The Financial Fraud Action UK (acting on behalf of the UK payment industry), states that in 2015 there were 1.5 million incidents of financial fraud, which includes card payments fraud but extends to other incidents of financial fraud too. They also state that UK economy is suffering estimated losses as a result of fraud in excess of £50 billion per year.

Take the time to identify where you may be at risk from fraud. Most businesses understand that there will be a level of risk in running a business, but you need to know, assess and reduce those risks where possible to stay in control of your financial risks.

Practical steps businesses can implement to limit the risk of being a victim of this type of fraud include:

  • If selling online, validate new customers using verification methods such as the Address Verification Service, or the Verified by Visa / MasterCard SecureCode. You can find out more about this by clicking here.
  • Make sure you record card numbers, expiry dates, CCV codes (the one on the back of the card near your signature), the identity of the bank that issued the card as well as the cardholders’ names and addresses.
  • Aim to keep all correspondence in writing as proof of the transaction, for example emails to show details of the purchase and delivery of the products.
  • Don’t release goods to unknown third parties, such as taxi drivers, even if they say they have been sent on behalf of the cardholder, without having satisfied yourself that this is a genuine arrangement. Even then, there is no guarantee that you won’t receive a chargeback.
  • Arrange delivery of goods to the actual address as specified by the cardholder and get a signed and dated delivery note.

If you're worried that you may have been a victim of card fraud, contact your own bank in the first instance. You can also inform the UK’s national reporting centre for fraud and internet crime, Actionfraud UK, their details can be found here. The UK Card Association has also issued general advice for retailers, it can be found here.

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