Member Benefits
Employee Fraud: The Threat Within
Unfortunately, sometimes the fraudsters you must guard against are right inside your own organization. Employee theft of customer information is a growing challenge for businesses. 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 using the merchant’s POS device utilizing funds meant for the merchant’s direct deposit account. Often these credits do not have an offsetting sale.
- Record Card Numbers -- Employees may pocket receipts left behind by cardholders or may copy card numbers onto another piece of paper. Point of sale (POS) terminals that truncate the card number on the customer’s receipt can help your business avoid this type of fraud.
- Use of Card Skimmers -- 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.
Employee Fraud Prevention Tips
Most terminals or transaction software tools allow a merchant to require a password in order to process a credit transaction, and there are a number of other tactics you can use to prevent employee fraud, including:
- Reconcile your work daily rather than monthly.
- Password protect your POS device and other payment processing equipment, if this feature is available.
- Password protect the credit function on your POS device.
- Secure your POS device during non-business hours.
- Have a separate authorizer of credits in addition to the person who physically processes a credit.
- Match credits to returned or disputed goods or services, verify with customers that they did actually return or dispute goods or services.
- Have more than one person review monthly statements.
- Review credits daily, or have a trusted employee do the review.
- Fully investigate credits without matching sales.
- Conduct quarterly internal audits as well as at random times and intervals.
- Track credits by card number, terminal number, employee, frequency, and dollar amount (exception based reporting).
- Review your monthly statements with your physical inventory.
- Inquire about additional products or reports available for review of credit card transaction detail.
- Protect your passwords and verify internal access controls for online account reporting, and checking account change requests.
This information is brought to you by Elavon.
Call Kimberly Layton with any questions about the credit card processing program at 1-866-638-8614.
Reprinted from Central Vac Professional, June 2009 |
