Credit Card Fraud and Your Business (Part 1 of 3)

What is credit card fraud and how can it affect my business?

Credit card fraud affects almost every business in Canada. Credit card fraud is responsible for the majority of all fraudulent transactions. Take preventative measures so your business isn’t targeted.

It is crucial to have measures in place to reduce your business’ risk of credit card fraud. This article will point out the most common types of fraud and how you can guard against them.

Canadian Credit Card Fraud Stats

One upgrade that all businesses should already be making to is the new Chip and PIN technology that provides increased security when processing payments at your business. Soon major credit card companies will not accept liability for fraudulent activity committed against a Canadian vendor who hasn’t adopted the new security standards that come with implementing Chip and PIN terminals.

Your business isn’t liable for credit card fraud if you can prove you took security precautions and closely monitor your accounts for possible threats. You business can have higher credit card processing rates if there is history of a large number of chargebacks (transactions needing to be reversed due to fraudulent activity), increasing the risk associated with processing payments for your business.

Common types of credit card fraud


Skimming is a process used to create copies of credit cards with stolen account information. It happens when a payment terminal is illegally changed to take your account information when your credit card is being processed. The banking information is then transferred onto the magnetic strip of a blank credit card.

  • Protect your business by checking cards for proper holograms and switching to the more secure Chip cards terminals that need the correct PIN and not just a signature to use.
  • Lost or Stolen Cards

    Criminals who use lost or stolen magnetic stripe credit cards can use them to make costly purchases or withdraw money. Most major credit card providers monitor the use of patrons’s accounts for fraudulent activity and will freeze an account with suspicious activity until the cardholder can be contacted.

  • Protect your business by comparing every buyer’s signature to see that it matches the one on the card, ask for identification, and switch to Chip card terminals that need the correct PIN to make a purchase.
  • Card-not-present fraud

    This most commonly affects online businesses or those that accept payments over the phone. Fake websites or scamming telemarketers may collect your credit information about a fake product then use the credit card information to create magnetic stripe cards or make unauthorized charges.

  • Protect your business by always asking for the expiration date and card security code.
  • Kubera’s virtual terminal is designed primarily for merchants who process payments without the card present.

    In our next post we’ll talk about what to do if your business’s credit is targeted for fraud.