One of the most critical best practices when it comes to accepting credit cards is to be educated on the various forms of fraud that may occur in credit card transactions at your shop. With the right training and preventative measures in place, you can protect your auto shop from fraud.

There are two types of fraud.

Stolen credit card fraud
Under these circumstances, a fraudster has obtained a consumer's credit card information and uses them illegitimately to buy goods and/or services. When the real cardholder sees the unauthorized charges, they will initiate a dispute.

Consumer-friendly fraud 
This is when a legitimate cardholder makes purchases with the intention of later disputing the charge.

Suspicious activity to be on the lookout for, and steps you can take to prevent fraud:

Properly vetting your customers and knowing how to identify suspicious activity will help you make informed decisions before you render services or ship out products. Here are three common types of suspicious activities that should throw up red flags:

Suspicious activity: Unusual orders from first-time customers 

New customers who contact you for bulk orders or put in frequent orders in a short period of time may indicate that they are using a stolen credit card. Because stolen credit cards have a very limited lifespan, fraudsters need to make as many purchases as they can before the real cardholder becomes aware of the activity, reports the card stolen and disputes the unauthorized transactions.

Legitimate high-dollar orders typically come from business-to-business customers or from established repeat customers. So if a new customer reaches out to you for these types of requests, it’s time to pause and access the situation.

What to watch for: 

  • A new customer who wants to make a bulk purchase. 

  • Back-to-back orders, usually within a week. 

  • Typically these types of purchases will be for items with a high resale value, such as tires, rims, or kits. 

Suspicious activity: The customer requests expedited shipping

A fraudster needs to rush the completion of their transactions before the card is reported stolen so they need to get their hands on the items fast. A legitimate customer typically may look to avoid paying high shipping costs, whereas the increased cost of expedited shipping is of no consequence to a fraudster.

What to watch for 

  • Requests for overnight shipping or expedited shipping 

Suspicious activity: The customer communicates strictly by phone, email, or text

Potential fraudsters avoid in-person contact and will insist on phone, email, or text communication – only.

What to watch for

  • The individual explains their inability to visit your shop in person by claiming to be in the hospital, having a disability, or being too busy. 

  • They request to send a different person to pick up the item(s).

Preventative actions to protect your auto shop from fraud

Remember, you are the first line of defense and are responsible for all transactions you submit. Here are preventative measures you should take:

  • Vet new customers who are trying to place large orders or back-to-back orders. 

    • Search for the individual and the name and reputation of the company they say they are representing (if applicable) on Google and social media.

  • Ask yourself these questions:

    • Does this seem out of the blue?

    • Does it seem too good to be true?

    • What is their tone like? Do they seem pushy, in a hurry, etc.? 

    • Why do they need overnight or expedited shipping?

  • Validate the customer

    • Match their ID to the credit card – this applies to in-person or pickup

    • Obtain signatures – a wet signature for in-person transactions and e-signatures for all others. 

Ultimately, if you suspect fraud, you can let the customer know you can’t accept the sale via card but can take cash, money order, or cashier's check. If you suspect fraud after you’ve already processed a transaction, refund all transactions immediately. 

If you want a second set of eyes when it comes to fraud, Shopmonkey works diligently with Shopmonkey Payments customers to identify and notify you of any unusual activity or fraud and will help guide you in the event of a dispute. Learn more about how Shopmonkey can help you reduce disputes and fraud.