Fraud Risks

• Card-Present Fraud
  • Use of stolen or counterfeit cards at the point of sale.
• Employee Theft
  • Internal fraud through cash skimming or unauthorized discounts.
• Sale of Age-Restricted Products to Minors
  • Non-compliance with laws leading to legal penalties.
• EBT Fraud
  • Misuse of government assistance benefits.
• Return Fraud
  • Exploiting refund policies for cash or merchandise.

Regulatory Challenges

• PCI DSS Compliance
  • Ensuring secure handling of payment card data.
• Age-Restriction Laws
  • Compliance with regulations for selling tobacco, alcohol, and lottery tickets.
• EBT Program Compliance
  • Adhering to SNAP regulations and requirements.
• Lottery Sales Regulations
  • Following state-specific rules for lottery ticket sales.
• Tax Compliance
  • Accurate collection and remittance of sales taxes.

Chargeback Triggers

• Unauthorized Transactions
  • Charges not recognized by the cardholder.
• Billing Errors
  • Incorrect charges or duplicate transactions.
• Quality Issues
  • Complaints about expired or spoiled products.
• Service Disputes
  • Dissatisfaction with customer service or store policies.
• Non-Compliance Penalties
  • Fines or disputes arising from regulatory violations.

‍

Frequent Small Transactions

• Potential card testing activity with numerous low-dollar purchases.

Multiple Transactions with the Same Card

• Repeated use in a short period, indicating possible fraud.

Suspicious Customer Behavior

• Nervousness or haste during transactions.

Transactions Below Floor Limit

• Purchases just under the amount requiring authorization.

High-Value Item Purchases

• Buying easily resellable items like cigarettes, alcohol, or prepaid cards in bulk.

‍

Business Verification

• Confirm valid business licenses and necessary permits.
• Verify the physical location and operational status of the store.
• Check compliance with local and state regulations for age-restricted sales.

Financial Assessment

• Review financial statements for revenue consistency and stability.
• Analyze average transaction amounts and daily processing volumes.
• Assess cash flow in relation to inventory turnover and operating costs.

Risk Evaluation

• Examine historical chargeback ratios and common reasons for disputes.
• Assess fraud prevention measures and employee training programs.
• Review procedures for handling EBT transactions and compliance.

Policy Review

• Ensure clear policies on refunds, returns, and age verification are in place.
• Verify that policies are visibly displayed and communicated to customers.
• Evaluate compliance with PCI DSS and EMV requirements.

Technology Assessment

• Confirm the use of secure, up-to-date point-of-sale systems.
• Ensure encryption and tokenization are implemented for data protection.
• Verify regular updates and maintenance of payment processing equipment.

Reputation Analysis

• Check online reviews and customer feedback for service quality.
• Investigate any history of regulatory violations or legal issues.
• Assess the effectiveness of complaint resolution processes.

‍

Spike in Chargebacks After Introducing New Payment Methods

• Sudden increase in disputes may indicate issues with the new system or fraud.

Employee Theft Incidents

• Reports of cash discrepancies or unauthorized transactions by staff.

Non-Compliance with Age-Restriction Laws

• Violations leading to fines, legal action, or license revocation.

Unusual EBT Transaction Patterns

• High volume inconsistent with store size, suggesting potential fraud.

Multiple Complaints About Expired Products

• Indicating poor inventory management and potential health risks.

‍

Business Operations

• What products and services does your store offer?
• What are your operating hours?
• Do you sell age-restricted products like tobacco, alcohol, or lottery tickets?

Payment Processing Methods

• What payment options do you accept?
• What is the average transaction amount?
• Do you offer cash back services with debit card purchases?

Employee Practices

• How many employees handle payment transactions?
• What training do you provide on payment security and regulatory compliance?
• Do you conduct background checks on staff?

Fraud Prevention Measures

• What steps do you take to secure customer payment data?
• How do you prevent sales of age-restricted products to minors?
• Do you utilize surveillance systems or other security measures?

Policies and Procedures

• What is your policy on returns and refunds?
• How do you address customer complaints and disputes?
• Are your terms and conditions clearly communicated to customers?

Compliance and Certifications

• Are you PCI DSS compliant?
• Do you hold necessary licenses for selling regulated products?
• Do you participate in government programs like EBT?

‍

Transaction Monitoring

• Implement real-time alerts for suspicious activities.
• Regularly review transaction reports for anomalies or fraud patterns.
• Monitor high-risk transactions, such as large EBT purchases.

Compliance Checks

• Ensure continuous adherence to PCI DSS and EMV standards.
• Stay updated on changes in regulatory requirements and implement necessary adjustments.
• Conduct periodic audits for compliance with age-restriction laws and EBT regulations.

Employee Oversight

• Perform regular audits of employee transactions and cash handling.
• Update training programs to address new fraud tactics and compliance issues.
• Enforce strict access controls and segregation of duties among staff.

Technology Updates

• Keep payment systems and software up to date with security patches.
• Implement advanced security features like encryption and tokenization.
• Regularly test and maintain POS equipment to prevent malfunctions.

Customer Feedback Analysis

• Monitor reviews and social media mentions for service or product issues.
• Address negative feedback promptly to improve customer satisfaction.
• Use feedback to identify potential areas of risk or operational improvements.

Merchant Communication

• Maintain open dialogue regarding changes in business operations or services offered.
• Provide resources and support for fraud prevention and regulatory compliance.
• Encourage proactive reporting of any suspicious activities or security concerns.

‍