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Four Tips on How to Spot Fake Credit or Debit Cards

Ray Moorman

The new EMV liability shift is on its way, but until then, merchants should be on the lookout for data breaches and fraudulent credit cards. One of the weakest links in the payments chain for today's magnetic stripe-based credit cards is the fact that hackers can obtain sensitive payment information from a merchant's network security. In doing so, they can then turn it around and manufacture a fake card using the same number but different personal information.

Identity theft in this context is a prevalent issue in the consumer ecosystem today. Since credit card use is extremely common, the fallout from a potential breach and subsequent identity theft has increased. In fact, according to the U.S. Department of Justice's Bureau of Justice Statistics, 85 percent of identity theft victims included the illicit use of existing credit card or bank account information in 2012 (1). 

Protecting customers' information is arguably the most important aspect of running a small business today because the financial ramifications of a data breach would likely cripple a local merchant operation. While partnering with the right payment processor and updating existing IT infrastructure are two sound ways to protect against cyber and card-not-present breaches, merchants should be aware of fake credit cards used in store as well.

That said, here are four tips on how to spot a fake debit or credit card:

  1. A damaged magnetic strip: Thieves can be clever, but they sometimes are lazy as well. They also may be looking for a quick score, so if the magnetic stripe on the back of the card is altered or demagnetized, there may be a chance the card is fake. Criminals do this if the information on the front of the card does not coordinate with the stripe on the back, therefore forcing the employee to manually enter the person's information. Business owners that come across a damaged stripe should either ask to see identification or request another card be used to complete the transaction. 
  2. The signature strip: Most crooks will likely know that no signature on the back of a credit card makes people suspicious. While it's easy to forge another person's John Hancock, it's more difficult to replicate the material on the back of a counterfeit card to match that of a real card. The signature strip on the back of credit and debit cards is different than the surrounding plastic. Businesses can help their salespeople learn how to spot red flags by providing training and best practices at checkout.
  3. Holograms and ultraviolet logos: Credit and debit cards should have a hologram sticker located on the card, making it an easy way to spot a counterfeit.  The Visa hologram is always a Dove, Discover uses a globe, and Mastercard has a world map.  What most merchant owners do not know is that credit and debit cards have a hidden UV logo located somewhere on the card, according to industry website Fraud Fighter. While this step isn't necessarily required for every piece of plastic that appears in a merchant's store, if there are any doubts to a customer's card, a  black light purchase can help determine whether or not the card in legitimate or not (2).
  4. Customer behavior: While some criminals are professionals, not every thief is going to be calm, cool and collected using a counterfeit card. One of the easiest ways to detect a fraudulent transaction is to observe how a customer is acting when they're completing a transaction. If they are nervous, jumpy or simply in a rush to get out of there, it's worth double-checking their card and identification.

1. U.S. Department of Justice, http://www.bjs.gov/index.cfm?ty=pbdetail&iid=4821 (Dec. 12, 2013)

2. Fraud Fighter, http://www.fraudfighter.com/counterfeit-detection-id-verification/bid/77557/How-does-UV-Counterfeit-Money-Detection-Work (May 1, 2012)

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