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Are Small Businesses More Vulnerable to Credit Card Fraud?

Small glass shops beware: your business may be more likely to fall victim to credit card fraudulent situations than larger businesses. According to Visa USA, more than 80 percent of cases opened since 2005 that involved unauthorized access to card data have involved small businesses. Generally speaking, what is that makes small, mom-and-pop shops most vulnerable? Quite possibly because the businesses are not as prepared to protect their customers’ credit card information. For example, card-processing companies [i.e., Visa and MasterCard] make available a list of card-industry rules all merchants are required to follow, but some say the companies focus on getting that information to the larger merchants more so than to small businesses. Still, some small glass shops say they keep pretty well current and informed about how to protect credit card information.

Grover Ballou, vice president of Amherst Glass in Amherst, Mass., says he’s familiar with the card companies’ rules.
“There are a lot of them [rules],” Ballou says. “And the companies keep us informed [about them] through mailing us information.”

Tom McChesney, owner of A-1 Glass in Garland, Texas, agrees.

“The card companies send out memos explaining what the laws are,” he says.

Ballou adds that card companies do a good job of keeping his business informed and updated.

“They tell us what we can and can’t do. For example, we don’t keep receipts past 30 days and we only have the last four digits of the card number on the receipt,” Ballou says. “We also shed receipts after 30 days so we don’t keep any card information on file and we have not had any problems.”

National news reports have told of situations where small businesses were victims of credit card fraud because information was stored on computers when it should not have been. Glass companies say this is not a problem for them because instead of storing information on the computers all cards are processed and filed manually.

“We don’t keep any credit card information on the computer,” says McChesney. “I take care of it all myself and the only information we keep is name, address, phone number and that’s in a file, not the computer.”

McChesney continues, “If someone bought something from me today and a week later wanted to order something else he would have to give me the number again, as I would not have a record of it.”

Alan Aday, owner of Glass Now Inc. in Frisco, Texas, personally has been a victim of credit card theft, and works hard to make sure his customers are protected.

“When the guys go out on a job if the customer wants to pay with a card I tell them to make sure they actually see the card,” says Aday, who says that’s most important—to see the card and not just let customers give out the card number.

“We write the number on the work order, we run it and then as soon as it’s cleared I shred that number,” says Aday. “We don’t even have a printer for the credit cards; we just write it all out and then shred the number.”

Aday says it’s also important to make sure and have a signature. “Get the signature and imprint, because that’s how you get paid,” Aday says.

Aday also agrees that one reason small businesses may be more vulnerable than large companies is because the card-processing companies do, in fact, focus more in that direction.

“The bigger companies are better protected,” Aday says, explaining that those companies have specific departments that are dedicated to protecting against credit card fraud, while small businesses often have only one or two people to cover it.

But what it comes down to in order to best protect customers is being careful - namely shredding documents. Aday says quite often there are stories on the news that tell about businesses that just throw away receipts and credit card numbers without shredding.

“They should be held accountable for just throwing everything away,” he says.

McChesney, too, says he’s extra careful. “I personally don’t want to fall into that pitfall.”

CLICK HERE to read read Visa’s card-industry rules for merchants.

CLICK HERE to read MasterCard’s card-industry rules for merchants.

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