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New Fraud Scheme Targets Customer Credit Transactions

In an ideal world, issuers and merchants would only have to focus on one thing: delivering the best possible experience for their customers.

Unfortunately, the constant threat of fraud requires businesses to always be on the lookout for criminal schemes. Recently, a new scheme has popped up that uses compromised merchant terminals to create bogus customer credit transactions. To help understand how this fraud could impact your business and ways to protect yourself, check out the tips below.

What's the scheme?

In this scheme, the criminals use compromised terminals to initiate multiple large-dollar customer credits to load funds onto a card. The fraudsters then use the cards to make numerous ATM withdrawals and/or purchases. For this scheme to work, time is of the essence. Typically, transactions begin within hours of the fraudulent customer credit before a reversal transaction can be completed to move the funds back to the merchant.

What should you watch out for?

Spotting this scheme isn't easy unless you know what to look for, so here are some things to keep in mind. First, it's important to know that these customer credits often originate from merchants that would not usually have large-dollar customer credits. Look for any atypical customer credit transactions and amounts.

You also can check to see if there is a preceding POS purchase transaction to match the credit. If you can't find one, you may want to take additional steps to ensure the transaction is legitimate.

Think you’ve been impacted by this scheme?

If you suspect that you've been hit by this scheme, we recommend you consult with your fraud-mitigation service provider and contact impacted cardholders.

PULSE has implemented new alerting rules designed to identify instances where customer credits are presented in unusual quantities and/or for atypical dollar amounts. DebitProtect® participants that receive these alerts should look closely at the associated transactions by logging into DebitProtect Case Manager and reaching out to us with questions. The PULSE Fraud Operations team is available to help. If you are not a DebitProtect participant, contact your Account Executive to learn more.

Fraudsters are extremely creative and will always find a security hole to exploit if given enough time, but that doesn't mean that prioritizing security is pointless. The best defense to fraud is a good offense. If you invest in the right security services and monitor your payments for anything unusual, you can reduce the risk of fraud.