The Customer Isn’t Always Right: Avoiding Forced Transaction Scams

Picture this: a customer walks into your business, gathers a cart full of your products, and approaches the cash register. They swipe a credit card to pay for the transaction, but the card is declined. The customer is understandably upset and steps aside to call their card issuer. They return a few minutes later with an authorization code, which you enter into your system to override the denial. The transaction processes, the customer leaves with their merchandise, and it’s only when you try to settle up with the card issuer that you realize the authorization code was fake. What went wrong here?

The Authorization Code Doesn’t Matter – Really

This kind of credit card fraud preys on well-meaning cashiers and business owners who want to believe that “the customer is always right.” When the customer steps aside and pretends to call their card issuer, they are likely calling no one at all. The cashier might be suspicious of this, but when the authorization code the customer provides is accepted by the system they usually breathe a sigh of relief and process the transaction. Most business owners would be shocked to learn, however, that any code at all will work! This is a technical limitation of the forced transaction process, and it allows scammers to exploit the system.

You Won’t Notice Until Your Statement Arrives

The real problem with this scam is that it can take days or weeks for the business owner to notice that fraud has taken place. In many cases, the business owner won’t see that the transactions were fraudulent until they receive their monthly statement from their credit card processor and see a big old Code 72 or 73 message. These codes mean that the transaction was either processed without authorization (code 72) or on an expired card (code 73), and either way the business owner is going to be responsible for the funds. By this time the scammer is long gone, and there is often very little the business can do to track them down. It’s a hard lesson to learn.

Train Your Team to Spot the Trap

Since there’s not much you can do once the damage has been done, putting policies in place to prevent this kind of fraud will serve you much better in the long run. When a customer’s card is declined and they claim it’s a mistake, they will likely hurry outside to make a call “to their bank.” Some particularly brazen scammers will then return, phone in hand, and have your cashier speak to an accomplice on the other end who will claim to be from the card issuer and provide a fake code. The only way to combat all this is to insist upon calling the card issuer yourself. Here are the numbers you’ll need:

  • Visa and MasterCard: 1-800-228-1122
  • Discover: 1-800-347-1111
  • American Express: 1-800-528-2121

Keep these numbers posted by your cash register, and train your employees well. They will need to call and verify the card details with the issuer. If a mistake truly has been made and the card should have been accepted, the issuer will provide you with an authorization code that you can confidently use to process the transaction.

We Can Help You Defend Yourself

If this is the first you’re hearing about this, blame your credit card processor. They are the industry experts, not you, and they should be putting your needs first. At 360 Payments, we make it a priority to educate our customers on the ins and outs of the credit card industry so they can stop potential problems before they happen. We’d love to show you why we’re different – give us a call at 1-855-360-0360 or drop us a line on our website. We’re looking forward to talking with you soon!

PS – The Equifax breach raised a lot of fraud concerns recently. Here’s how to protect yourself.

PPS – If you sell your products and services online, here’s how to protect yourself from credit card fraud.

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