Cashiers are best defense against credit-card fraud

Nation's Restaurant News, April 12, 1993 by James R. D'Amelio

The U.S. restaurant industry lost more than $6.7 million because of fraudulent credit-card activity last year. Although the criminal element is very adept at finding ways around security measures, we believe new and well-planned mechanisms and procedures will effectively limit fraud losses within the next few years. However, existing card-security features, when properly inspected by cashiers, now provide the potential for reducing fraud losses in the restaurant industry tremendously.

Card-security features

With greater diligence, fraud losses can be substantially reduced by cashiers who use the security features already designed into cards. Those features, which can be checked in a matter of seconds, include:

* Holograms: Bankcards have holograms that display motion when moved. For instance, the two-and three-dimensional holograms on a genuine MasterCard bankcard display motion side-to-side when moved.

* Signature panels: Bankcard signature panels have repetitive designs incorporating the bankcard name. These panels are tamper-evident, thus making erasures of a signature more obvious. A cashier should not process a transaction if the signature panel appears to have been erased, discolored, glued or painted. Also, a comparison should be made between the signature on the card and the sales draft to ensure that they match -- an effective step often omitted.

* Account number embossing: All embossed account numbers should be the same size, height and style as well as in alignment. All MasterCard cards should have 16-digit account numbers beginning with the number 5 although Visa cards may have 13- or 16-digit account numbers beginning with the number 4. If account numbers have been re-embossed, different original numbers may be visible on the back of the card.

* Embossed security characters: Increasingly, bankcards have security characters embossed on the front of the card next to the expiration date. There may be an MC symbol on MasterCards and a CV, BV or PV symbol on Visa cards. The MC appears on cards bearing the indent-printed account number on the signature panel; cards with the VISA security characters should have a bank identification number matching the first four digits of the embossed account number -- and printejd directly above it. The account number on the back of the card should, of course, correspond to the account number embossed on the front of the card. If it doesn't, the card is fraudulent.

Calling 'Code 10'

If a card does not measure up to any of the built-in security features, or if it appears that the card has been tampered with in any other way, the cashier handling the transaction should call the restaurant's card authorization center immediately for a Code 10 authorization, being careful not to arouse the cardholder's suspicion. When a cashier gets the Code 10 operator on the line, he or she should:

* Retain the card and answer the operator's questions, following any directions given until the operator helps determine if the card is valid.

* Maintain a calm, courteous attitude toward the customer even if there is a problem and refer the card bearer to the card-issuing institution for information.

* Try to keep the card if asked to do so by the operator but, under no circumstances, try to apprehend the customer or engage in a struggle over the card.

When training your cashiers in fraud-management techniques, remember to inform them that they may be eligible for a reward for intercepting and returning a fraudulent card.

Task force and other weapons

MasterCard International and others are also fighting fraud in many other ways. An international task force has been formed that works with law-enforcement agencies worldwide to combat fraud.

This year the U.S. Postal Service implemented a program aimed at stopping the mail theft of newly issued cards, following a 1991 test that led to 100 arrests involving 1,600 cards. In addition, pending congressional legislation would provide federal law enforcement agencies and the bankcard industry with new muscle in the fight against laundering credit-card drafts.

Advances in card-verification technology also carry high expectations for new fraud-foiling measures.

But for restaurateurs the front line of defense against credit-card fraud remains the cashier. Put in the context of overall credit-card sales, fraud is infrequent, but it can be costly when it does occur.

Training cashiers to adhere to a few simple, recommended procedures when checking cards and authorizing transactions can pay big dividends in reducing fraud and the resulting losses.

[James R. D'Amelio is vice president of security and risk management for MasterCard International.]